Canadian manufacturing sales rebound
- February 13, 2015
After falling in October and November 2014, Canadian manufacturing sales rebound in December 1.7 per cent, exceeding market expectations of 0.9 per cent, according to the latest figures from Statistics Canada.
The December increase occurred despite a 9.3 per cent drop in petroleum and coal sales.
"The gain in the volume of manufacturing sales in December more than retraced declines in the prior two months and left the measure up a sizeable 5.7 per cent from a year ago." says Nathan Janzen, an economist with RBC Economics in a report. Volume sales in 2014 as a whole rose by a respectable 2.7 per cent following 0.9 per cent in 2013.
Details of the December report, including a drop in inventories, pointed to a somewhat smaller gain in manufacturing production than the volume sales gain alone would imply; however, even accounting for this factor still suggests that the manufacturing component of GDP will rebound by 1.0 per cent or more, predicts RBC.
"That would retrace much of the surprisingly large 1.9 per cent drop in November and underpins our expectation that overall GDP increased by 0.2 per cent in December after the 0.2 per cent November decline. Lower oil prices, while likely to continue to weigh on the nominal sales of petroleum products in the near term, are likely still a positive for the manufacturing sector on balance due to an attendant weakening in the Canadian dollar and a positive effect on US demand. We believe that strength in manufacturing will provide a welcome source of offset to expected weakness in the oil and gas extraction and related sectors of the economy this year," note Janzen.