Statistics Canada announced the monthly manufacturing sales report on Tuesday. Printing marginally lower than analysts’ estimate, the report weighed on the Canadian dollar in the forex market.
Manufacturing sales dropped by 0.6% in November that marked the third consecutive month of decline. Factory sales were noted to have contracted by 0.2% in October (revised figure), following which, analysts had expected the drop to widen to 0.5% in November. Excluding price impacts, the contraction in manufacturing sales was even wider at 0.8%.
11 Out Of 21 Industries Posted A Drop In Manufacturing Sales
According to the report, 11 out of the total of 21 prominent industries in Canada posted a drop in sales in November. Durable as well ass non-durable goods posted weak data for November with the former remaining unchanged while the latter dropping another 1.3% in November. The sharpest decline was seen in primary metals which posted a massive 11.7% drop. As per Statistics Canada, the contraction in this sector was largely associated with the ongoing rail strike that affected the transportation system. The strike also contributed to the drop in other sectors like chemicals (3.6%), petroleum and coal products (1.3%) and food (1.7%).
On the contrary, a reasonable rebound was witnessed in transportation equipment sales (4.2%). Fabricated metals also noted a 4.7% increase in sales in November. In the post-UAW strike period, shipments of aerospace products and motor vehicle parts also saw an over 8% increase.
The report also highlighted on Tuesday that the weakness in manufacturing sales was also spread across various regions. Sales were down 1.6% in Quebec, 3.1% in Manitoba, 8.3% in Brunswick, and 2.6% in Alberta. A slight improvement (1.4) in sales in Ontario helped offset the decline in other regions to some extent.
Response In The Forex Market
Inventories were reported to have climbed to 0.5% in the monthly report that fueled the inventory to sales ratio higher to 1.54 versus 1.52 recorded in October. Unfilled orders were posted at 0.1% in November’s report while the new orders were up by 1.9%.
The forex market responded moderately to the economic data on Tuesday. Following the report, USD/CAD climbed from a low of around 1.3050 to 1.3072. At the time of writing, analysis of the chart highlights Tuesday’s gain to be sustainable with the currency price currently settling around the daily high of 1.3075. The monthly CPI report and the Bank of Canada’s decision regarding monetary policy scheduled for Wednesday are sure to give a definitive direction to the USD/CAD pair for the upcoming months.