Data released today showed that Canadian manufacturing sales fell again in July. National Bank of Canada analysts point out that real inventory-to-sales ratio reached its highest level since the recession, which does not point to a significant rebound in production in the coming months.
Key Quotes:
“Manufacturing shipments fell 1.3% in July to C$57.2 billion, much worse than the -0.1% print expected by consensus. That result followed a 1.4% decline in the prior month.”
“The unadjusted capacity utilization rate in Canada’s manufacturing sector slipped 4.0 percentage points to 77.3%.”
“This deterioration in the headline number comes on the back of a poor showing in June. Specifically, sales fell in the primary metals industry following an outsized increase in the prior month.”
“Real shipments dropped a significant 1.6% in the month and mark a fourth decline in the first seven months of the year. Notwithstanding the increase in inventories in July, the manufacturing sales data should detract from July GDP. The dichotomy between shipments and inventories has only gotten wider in this latest report.”
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