Canadian manufacturing sales fell by 0.8% in May from April, significantly worse than expected, with the auto industry not bouncing back yet from a tsunami-related fall in April.
Statistics Canada reported on Friday that 11 of 21 industries, representing 72% of manufacturing, posted declines. The auto industry, which had suffered supply-chain disruptions because of the Japanese tsunami in March, fell a further 1.5% after April's 8.2% drop.
The median forecast in a Reuters survey of economists was for a 0.2% decline, and the worst of 13 predictions was for a 0.6% fall. Sales in April had dropped 1.3%.
Sales in constant dollars, used for calculating real gross domestic product growth, fell the same 0.8%. Inventories climbed for the eighth straight month, by 0.7%, to their highest level since April 2009. The ratio of inventory to sales jumped from 1.35 to 1.37, the highest since February 2010, reflecting higher inventories and two months of lower sales.
A bright spot was the increase in unfilled orders for the fifth straight month, of 0.9%. It was driven by the volatile aerospace industry, and partly reflected simply the lower value of the Canadian dollar during May, which made U.S.-dollar-denominated orders more valuable in Canadian currency.
