Canadian factory sales declined in June, primarily driven by lower volumes of petroleum products and a fall in chemical sales. According to Statistics Canada, manufacturing shipments were down 1.7% from the previous month, reaching 71.5 billion Canadian dollars (approximately $53.11 billion USD) on a seasonally adjusted basis.
This drop in sales was softer than the initial estimate by Statistics Canada, which had predicted a 2.1% decline for the month. In May, there was a modest gain of 1.2% in manufacturing sales.
When considering volume or price-adjusted basis, manufacturing sales experienced a 1.0% decrease in June, indicating lower volumes of goods sold.
Auto sales, however, saw a significant increase of 11.4%, reaching the highest level since June 2019. This surge was mainly due to increased production in many factories.
Excluding motor vehicles, parts, and accessories, manufacturing sales dropped 2.4% compared to the previous month.
Despite the decline in sales, inventory levels held by factories increased by 0.3% in June. This was driven by higher levels of aerospace products and parts, as well as chemicals. Additionally, unfilled orders increased by 0.2% for the month, and new orders were 1.2% higher.
In terms of the overall economy, Canada experienced a rebound in economic activity during the first quarter, driven by stronger household spending and favorable international trade. However, the central bank predicts subdued growth for the rest of the year as the economy adjusts to higher interest rates.
As for the manufacturing sector, it remained in contraction territory in July due to weak demand, resulting in job losses and lower buying activity. S&P Global's monthly purchasing managers index saw a modest increase to 49.6 from the previous month's figure of 48.8, partially attributed to a marginal rise in output.
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