Canadian manufacturing sales unexpectedly dropped a sizable 1.5% in July, building on a downwardly revised 0.8% drop in June, according to figures released this morning by Statistics Canada. Much of the weakness in overall sales reflected a sharp 6.4% drop in transportation sales.
The bulk of the drop in transportation orders was a result of a 22.1% decline in the volatile aerospace component. Sales of motor vehicles declined 3.2% following 1.0% and 2.0% increases in June and May, respectively.
Excluding the transportation component, sales were down a more modest 0.4% reflecting largely weakness in machinery (-2.4%) and paper (-2.4%) sales that was only partially offset by stronger food sales (+0.5%). Sales of petroleum and coal products were unchanged following outsized declines of 10.1%, 6.4%, and 8.5% June through April, respectively.
This suggests that the impact of a number of temporary refinery shutdowns that weighed on this sector in recent months is easing.
Excluding the impact of prices, the volume of manufacturing sales dropped 2.0% in July following revised readings of -0.1% in June (was +0.1%) and 1.1% (was 0.6%) in May.
On a regional basis, sales declined in five provinces in July, led by declines in Ontario (1.9%) and Quebec (2.6%). Sales in Quebec were weighed down by a sharp 45.1% drop in aerospace production. A 6.8% gain in sales in New Brunswick provided some offset.
