Canadian manufacturing sales plunged 2.4% in April, well below market expectations for a 0.3% gain, following a 0.6% drop in March and a 3.5% surge in February.
Experts say much of the weakness in sales was concentrated in an 8.8% drop in petroleum and coal sales, reflecting in part falling prices but also temporary maintenance, and an 8.7% drop in primary metal sales.
Excluding these components, however, sales were still down 0.7% in April. Declines in aerospace of 3.3% and motor vehicle sales of 2.2%, pushed the transportation component down 1.7% while a 7.1% gain in computer and electronics and 4.9% hike in wood product sales provided only partial offset.
The drop in April leaves the volume of manufacturing sales down 3.5% from a year ago.
But, to quote experts at RBC Economics, "part of the weakness reflected a temporary maintenance related drop in the petroleum and coal component that will likely be reversed going forward and an earlier-reported increase in the RBC Canadian manufacturing PMI to a 12-month high in May, provides some reason for optimism that, as we expect, improving external demand will allow the sector to emerge over the second half of 2013 from a lackluster performance over the past year.
"In terms of near-term implications for GDP growth," the bank concludes, "the details of today’s report, including a stronger build in inventories, suggest that the decline in sales likely significantly overstates weakness in value-added production."
