Canadian Manufacturing Sales: Underlying trends still look respectable - RBC CM

Data released today showed that  manufacturing sales rose 0.2% in September in Canada. Nathan Janzen, Senior Economist at RBC Capital Markets points out that looking through monthly volatility, underlying trends still look respectable with tear-over-year manufacturing sales up 1.9% and volumes 2.4%.

Key Quotes: 
 
“Manufacturing sales inched up 0.2% in September. Controlling for an increase in prices, sale volumes ticked 0.1% lower after a 0.4% drop in August. Together, those declines still only partially retraced a 1.1% increase in July, though. Motor vehicle sales bounced back 4.8% in September after a 7.1% drop in August as atypical production shutdowns eased. A 6.3% drop in machinery sale volumes was the main source of offset.”

“Given earlier strength, underlying trends still look respectable. Sale volumes were still up 5.5% at an annualized rate in Q3 from Q2 and are still up 2.4% year-to-date relative to year-ago levels. Business surveys continue to suggest that capacity constraints and labour shortages are growing headwinds and a pullback in oil prices in recent weeks has raised some concern about some potential retrenchment in the energy sector.  At the same time, a stronger Canadian economy and much improved U.S. industrial sector still seem to be supporting demand growth.”