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Statscan said Tuesday that factory sales rose by 0.7 per cent in May, the biggest decline in nearly four years.Lars Hagberg/The Globe and Mail

Canadian manufacturing sales rose a paltry 0.7 per cent in May, according to numbers released on Tuesday by Statistics Canada.

The sector beat out the gloomy forecasts of analysts, which ranged from a 0.8-per-cent decline to a 0.2-per-cent jump. And while it's certainly better news than the numbers in April – a month that saw sales slip 2.1 per cent – manufacturing sales remained sluggish in May, running 3.3 per cent below where they were a year ago.

The chemical industry reported the biggest bump in dollar sales – up $195-million to $4-billion – thanks in part to a cold wet spring, which had farmers put off planting and pushed fertilizer sales into May.

Sales of primary metals rose $3.5-billion in May, a 4-per-cent bump after falling 9.1 per cent in April. Machinery and fabricated metal products also saw sales increases of 3.8 per cent and 3.4 per cent respectively.

However, sales in the food industry fell to their lowest level since November, 2012 – down 1.3 per cent to $7.3-billion.

The wood-product industry posted a 4.8-per-cent decline in sales, the first decrease in seven months. However, sales in that sector are still up 26.5 per cent compared with this time last year.

While the manufacturing did better than analysts expected, most remain less than optimistic.

"[W]hile the pickup in monthly sales is encouraging for future activity in the sector, a pullback in inventories in May suggests that the sales gain was largely pulled from existing inventories rather than new production," said Nathan Janzen, a Royal Bank of Canada economist.

"Even with this morning's report, the manufacturing sector appears to be struggling," said Marc Pinsonneault, a National Bank of Canada economist.

"An 11.7-per-cent drop in sales of petroleum and coal products and a 8.5-per-cent drop in demand for motor vehicles and parts have pushed manufacturing sales down 3.2 per cent," Mr. Pinsonneault noted.

However, while auto sales were down in May, the sales figures from June have car companies singing a happier song.

"It has been a great year for the auto industry in Canada and we expect that the industry is headed for a record year in sales with our forecast at 1.76 million vehicles sales for 2013," said Graeme Whickman, vice-president of sales for Ford Motor Co. of Canada Ltd., said in an e-mail.

But Mr. Pinsonneault is adopting a wait-and-see approach. "It is not clear to which extent the [auto] industry will benefit from the current surge in demand for new cars in the U.S.," he said.

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