Statistics Canada says manufacturing and wholesale sales post gains in November

OTTAWA – Manufacturing sales were better than expected in November, rising 1.0 per cent to $50.8 billion amid a big boost from the auto sector, which saw sales improve 3.8 per cent, Statistics Canada reported Wednesday.

Economists had expected manufacturing sales to increase 0.5 per cent, according to Thomson Reuters.

Royal Bank senior economist Nathan Janzen said the increase followed three consecutive months of decline in manufacturing sales.

“Part of the gain reflects higher production in the notoriously volatile aerospace component,” Janzen noted.

“However, the details of the report still point to the manufacturing component of monthly GDP rising by 0.5 per cent in November to partially retrace the 0.3 per cent and 1.0 per cent declines in October and September, respectively.”

The sales increase in the motor vehicle sector was driven by increases in the value of vehicles assembled in Canada.

Statistics Canada noted that since the beginning of 2015 all five of the largest motor vehicle assembly companies in Canada have shifted their production to either higher value models and trims, or upgraded versions of the vehicles they produce.

Sales of auto parts also rose 2.6 per cent in November, the fourth gain in five months.

The gains were offset by lower sales of other transportation equipment, primary metals and petroleum and coal products.

In constant dollar terms, sales were up 1.0 per cent.

TD Bank economist Diana Petramala noted manufacturing should contribute to economic growth this year and next.

“Since there is usually a significant lag between currency depreciations and the positive knock-on effects to trade, the full benefit of a weaker loonie is still to come,” Petramala wrote in a note to clients.

“As such, while the income shock from the plunge in oil prices is likely to pinch economic activity, we continue to believe that the improvement in foreign demand for Canadian non-energy related goods will provide an offset to the drop in investment in the oil patch.”

Statistics Canada also reported Wednesday that wholesale sales gained 1.8 per cent to $55.9 billion in November, the first increase in five months.

Economists had expected a gain of 0.5 per cent, according to Thomson Reuters.

There were advances in four of the seven subsectors, led by the motor vehicle and parts group, which saw sales rise 4.8 per cent to $10.0 billion.

Sales in the machinery, equipment and supplies subsector fell 1.0 per cent to $11.2 billion.

Excluding motor vehicle and parts, sales were up 1.2 per cent for the month.

In volume terms, wholesale sales increased 1.6 per cent.