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Motor vehicle sales dropped 12.0 per cent to $4.53-billion in August, following a 13.7 per cent July increase. Automobile parts sales slid by 10.8 per cent to $2.05-billion, Statscan said.MARK BLINCH/Reuters

Canadian factory sales fell from a record high in August, with the fastest decline in more than five years led by a decrease in automobile shipments.

Sales dropped 3.3 per cent to $52.1-billion, the fastest since May 2009, Statistics Canada said today in Ottawa. The decline exceeded all 15 predictions in a Bloomberg survey that had a median forecast for a 2 per cent fall.

Sales dropped after seven months of gains boosted by auto makers meeting rising demand. Bank of Canada Governor Stephen Poloz has said the world's 11th largest economy needs sustained gains in exports and investment to erase spare economic capacity. Canada's manufacturers were among the hardest-hit industries in the global financial crisis of 2008.

"A lot of the weakness in August manufacturing should be viewed as a one-off given the influence of autos recently," Mazen Issa, senior Canada macro strategist at TD Securities in Toronto, said in a research note. "Nonetheless, the weak data run as of late paired with market turmoil will give ample scope for the Bank to remain cautious at next week's interest rate announcement," set for Oct. 22, he said.

Canada's dollar dropped 0.6 per cent to C$1.1325 per U.S. dollar at 9:13 a.m. Toronto time, the weakest since July 2009. Ten-year government bond yields dropped to 1.85 per cent from 1.92 per cent, the lowest since May 2013.

Motor vehicle sales dropped 12.0 per cent to C$4.53-billion in August, following a 13.7 per cent July increase. Automobile parts sales slid by 10.8 per cent to C$2.05-billion.

Excluding autos and parts, sales fell 1.9 per cent to C$45.5-billion. Sales were lower in 16 of 21 categories tracked by Statistics Canada, accounting for 81 per cent of production, including a 3.4 per cent fall in petroleum and coal to C$7.30-billion.

Excluding price changes, a better indicator of the industry's contribution to economic growth, factory sales fell 3.7 per cent.

New orders declined 3.8 per cent to C$52.0-billion, and unfilled orders slid 0.1 per cent to C$89.2-billion.

Inventories declined 0.6 per cent to C$71.3-billion, with the ratio of factory stockpiles to sales rising to 1.37 from 1.33 in July.

From a year earlier, manufacturing sales rose 6.1 per cent.