Canadian manufacturing sales rose 0.7% in May, partially retracing a sizable 2.1% drop (previously reported as -2.4%) in April.
Figures released this morning by Statistics Canada showed the gain in May reflected relatively solid growth in durable goods sales (+1.3%) alongside relatively flat sales of nondurable goods (+0.2%).
On the durable side, auto sales rose 1.9% with each of primary metal (4.0%), fabricated metal (3.4%) and machinery (3.8%) sales also providing solid support.
The modest gain in nondurables reflected an outsized 5.1% gain in chemical sales almost entirely offset by relatively broadly based weakness elsewhere. The jump in chemical sales more-than-retraced 2.0% and 2.1% declines in April and March, respectively with
Statistics Canada noting that the pattern largely reflected a bounce-back in fertilizer sales in May after poor weather earlier in the spring planting season delayed sales.
Partially as a result, RBC Economics experts said this morning they expect "GDP growth to pick up in the second half of this year as the external demand backdrop improves.
"However," the bank concludes, "along with the likelihood that activity in June was hampered by the Quebec construction strike and flooding in Alberta, today’s manufacturing sales report suggests, if anything, some modest downside risk to our forecast that GDP growth slowed to 2.1% in Q2 from its 2.5% Q1 rate."
