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The Globe and Mail

Manufacturing sales rise 0.4% in September

A worker assembles a Bombardier Global business jet at Bombardier's manufacturing facility in Toronto on May 29, 2012.


Factory sales rose 0.4 per cent to $49.8-billion in September, slightly better than expected, according to Statistics Canada.

Production in the volatile aerospace industry jumped 43 per cent to $1.8-billion, the biggest increase since last May when production rose 66.8 per cent.

Excluding the aerospace sector, total manufacturing sales fell by 0.7 per cent, Statscan said.

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Factory sales rose in 8 of 21 categories, representing just under half of Canadian manufacturing.

In the key automotive sector, sales declined 3.6 per cent to $4.6-billion. However, Statscan points out that manufacturing sales of motor vehicles and parts have been gradually rising since the late 2008 economic downturn, though the gains have been modest compared with other manufacturing industries.

The share of sales by motor vehicle manufacturers relative to total manufacturing in the first 9 months of 2012 was 9.1 per cent.

That's up from a low of 6.4 per cent in 2009, but still well off the most recent peak of 15.5 per cent in 1999.

This reflects the fact that Canada has witnessed the closing of several auto assembly plants and parts facilities over the past decade.

"The month's increase was entirely driven by a searing increase in aerospace products and parts, a category that tends to be quite volatile, given large choppy orders in the sector," CIBC World Markets economist Emanuella Enenajor said in a note Thursday.

"The 0.4-per-cent gain in volumes should be a positive for GDP, although the impact on growth could be limited as aerospace shipments may happen long after the associated manufacturing value-added has been recorded in GDP," she said.

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Krishen Rangasamy of National Bank Financial Markets said in a research note that the sales report looks good on the surface but "the details were less impressive.

"Not only was there a sharp downward revision to the prior month, but strength in September was isolated to just a few sectors," he said.

"Strength in sales of aerospace and petroleum/coal products in particular helped support factories in the quarter," he said, adding that the final quarter of the year is not shaping up as a good one for factories if the slump in new orders is any indication.

"The moderation in factory sales in the second half of the year isn't all that surprising given the global economic slowdown underway. We continue to expect Canadian GDP growth to average well below 2 per cent in the second half."

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