December’s report suggests a sharp decline in manufacturing sales in Canada

Statistics Canada announced the monthly manufacturing sales report for December on Tuesday. The data highlighted Canadian factory sales to have sharply declined in December. 2019 was a tough year for Canada’s manufacturing sector at large. Tuesday’s data highlighted that the last economic report concerning the manufacturing sector failed to stir any optimism in it either.

December’s report on Canadian factory shipments marked the fourth month in a row of decline. Manufacturing sales were recorded 0.7% down in December as compared to November’s reading. According to Statistics Canada, much of the drop in Canadian factory sales was attributed to motor vehicle sales keeping under pressure towards the end of last year. In a previous forecast, economists had forecast a 0.8% rebound in factory sales in December.

Canadian Motor Vehicle Sales Dropped By 6.8% In December

Following the CN Rail strike that ended in November, export data had shown a rebound in the previous month that led economists into anticipating December to extend optimism in terms of manufacturing sales in Canada. The recently posted decline in new orders also fueled expectations that 2019’s final quarter continued to weigh on the Canadian economy.

The decline in motor vehicle sales in Canada was noted at 6.8% in December. Aerospace products, on the other hand, printed a 16% decline in sales to add to the overall pressure on Canadian manufacturing sales in December. Tuesday’s data also reported that more than half (11 out of 21) industries registered a decline in sales. The 11 industries account for 43% of the manufacturing sector in Canada.

In terms of volume, sales in December were announced to have seen a 0.4% decline. Despite the challenges, however, the Canadian manufacturing sector still managed to record a 0.5% improvement in sales for the entire year (2019). In the prior year, the drop in manufacturing sales was printed at a significantly higher 5.4% and an even 6% higher in 2017.

Response In The Forex Market

Tuesday’s economic data cast a moderately strong impact on the forex market that resulted in the Canadian dollar losing strength against the greenback. USD/CAD, also known commonly as Loonie, surged higher in the forex market following the release of economic data and was last seen trading at around 1.3277. USD/CAD was previously trading at 1.3236 at the start of the day. Much of the gain, however, was reported unsustainable with the currency pair currently exchanging hands at around 1.3255.