OTTAWA: Canadian factory shipments declined sharply in September because of lower motor vehicle and energy sales, raising questions about the pace of Canada’s economic recovery.
Manufacturing sales in Canada fell 1.5% from a month earlier to 51.08 billion Canadian dollars ($38.35 billion), Statistics Canada said on Monday. Expectations were for a 0.2% increase in September, according to economists at Royal Bank of Canada.
The August data were revised to indicate sales fell 0.6%, compared with an earlier estimate of a 0.2% decline. Sales volumes, which economists use to gauge the level of economic activity, fell 1.6% in September.
“Obviously the headline and some of the details are weaker than expected and frankly are a disappointment,” said Doug Porter, an economist at BMO Capital Markets.
Mr. Porter said the report will fuel concerns that Canada’s gross domestic product contracted in September after three consecutive months of growth, although he still expects that the third quarter will be positive. “It does raise some serious questions about the economy’s underlying momentum,” Mr. Porter said.
Canada’s economy shrank for two consecutive quarters during the first half of 2015, as sharply lower oil prices dragged down business investment and the Canadian dollar. The Bank of Canada expects a return to growth in the second half of the year, which it says will be led by nonresource exports.
On a year-over-year basis, Canadian factory sales were down 2.9%. Factory shipments in September fell in 13 of the 21 industries tracked, led by a 10.3% decline in the motor vehicle industry, the largest monthly drop since February.
Sales in the petroleum and coal product industry shrank 7.1%, largely reflecting maintenance shutdowns that were more extensive this year than usual, Statistics Canada said. Sales in the machinery industry, which rose 9.6% in September, helped offset some of those declines. Primary metal sales grew 4.3%.