Canadian factory sales saw an increase in November, driven by a recovery in output from chemical plants that had previously shut down and a rebound in sales of primary metal products. According to Statistics Canada, manufacturing shipments rose by 1.2% to a seasonally adjusted 71.69 billion Canadian dollars ($53.46 billion).
Rebounding from a Previous Drop
This growth in factory sales marked a partial rebound from the 2.9% decrease in October, as reported by the data agency. Furthermore, manufacturing sales on a constant dollars basis rose even more strongly at 1.6% to C$55.51 billion in November. This indicates that the rise was primarily driven by an increase in the volume of goods being sold rather than higher prices, as the industrial product price index declined by 0.4% during the same period.
Overcoming Motor Vehicle Sales Decline
Notably, the improvement in factory trade occurred despite a decline in motor vehicle sales. Motor vehicle sales experienced a second consecutive monthly decline due to an ongoing shutdown at a major assembly plant in Ontario for retooling. However, when excluding motor vehicles, parts, and accessories, manufacturing sales still increased by 1.5% compared to the previous month.
Positive Export Performance
In addition to the domestic growth, exports of vehicles and parts also saw a positive performance in November, rising by 1.4%.
These recent figures indicate positive momentum in the Canadian manufacturing sector, with increased output and sales in various industries contributing to overall growth.
Canadian Economic Outlook
Statistics Canada has reported positive news for the chemical industry, with sales of chemical products increasing by 6.6% after three consecutive months of decline. However, despite the recent growth, sales for this segment remain 1.1% lower than the previous year. On a more optimistic note, the non-ferrous metals sector experienced higher sales (excluding aluminum) due to an increase in prices, resulting in the first uptick in primary metal product sales in four months.
In terms of inventory levels, factories witnessed a 0.5% rise in November, reaching the highest recorded level. This increase was primarily driven by transportation equipment, machinery, and petroleum and coal industries.
While unfilled orders, representing future sales potential if not canceled, decreased by 0.8% in the same month, aerospace manufacturers managed to fill their backlog orders, contributing to this decline. Additionally, new orders dipped by 0.3% compared to the previous month.
The Bank of Canada has projected a subdued economic growth outlook. The third quarter of 2023 experienced contraction on an annualized basis due to a decline in international exports and reduced inventory buildup by businesses. However, the bank expects the economy to pick up again later this year.
Canadian Manufacturing Downturn Intensifies
The Canadian manufacturing sector appears to have experienced a further decline in December, as indicated by S&P Global's latest survey. The survey reveals a faster drop in both output and new orders, along with signs of job cuts. Last month, the manufacturing purchasing managers' index plummeted to 45.4, reaching its lowest level since May 2020. This marks the eighth consecutive month that the index has remained below the critical threshold of 50, which signifies a contraction rather than expansion in the industry.
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