Canadian December Factory Sales Rise More Than Forecast
By Greg Quinn
February 13, 2015
(Bloomberg) — Canadian factory sales rose faster than economists predicted in December as gains in motor vehicles and machinery more than made up for lower crude oil prices.
Sales climbed 1.7 percent to C$52.4 billion ($41.8 billion), Statistics Canada said today in Ottawa. Economists forecast a 0.9 percent increase, according to the median of a Bloomberg survey with 15 responses.
A weaker Canadian dollar is aiding manufacturers by making their goods cheaper to foreign customers. Faster growth in the U.S. is also helping.
Bank of Canada Governor Stephen Poloz suggested manufacturing gains won’t be enough to sustain the recovery, prompting him to make a surprise interest-rate cut on Jan. 21. Poloz said Canada’s economy is threatened by cheaper oil prices that will probably crimp business investment.
Today’s report is “definitely a nice relief,” said Scott Smith, senior market analyst at Toronto-based Cambridge Global Payments. “I don’t think this is indicative of a longer lasting trend,” he said, citing the coming drag from lower oil prices.
Petroleum and coal product sales dropped 9.3 percent to C$5.77 billion as prices fell 11.6 percent. The category has fallen for six straight months for a total decline of 24.1 percent.
Canada’s dollar strengthened 0.5 percent to C$1.2444 per U.S. dollar at 10:28 a.m. Toronto time. The currency closed at C$1.2732 per U.S. dollar on Jan. 30, the weakest since March 2009, and Smith said it could reach C$1.30 later this year if the economy weakens.
New factory orders rose 1.5 percent to C$52.6 billion in December. Unfilled orders rose for a fourth consecutive month, by 0.3 percent to C$91.2 billion.
Inventories declined 1.4 percent to C$70 billion, with the ratio of factory stockpiles to sales falling to 1.34 from 1.38 in November.
Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales rose 2.9 percent.
The December gain means that manufacturing sales rose by 5.2 percent from the same month a year earlier.