Canada manufacturing sales rebound sharply in November

Fri Jan 18, 2013 11:10am EST
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OTTAWA (Reuters) - Canadian manufacturing sales bounced back in November after a dismal performance in October, offering a glimmer of hope for growth amid a string of disappointing data and weak global demand for the country's goods.

Factory sales climbed 1.7 percent in the month, above forecasts for a 1 percent gain, on strength in the transportation equipment, primary metal and chemical industries, Statistics Canada said on Friday.

That more than compensated for the 1.2 percent slump in sales in October but still left sales below the peak registered just before the 2008-09 recession.

The report supports forecasts of modest economic growth in November and an improvement in the fourth quarter compared with the third, said Paul Ferley, assistant chief economist at RBC Economics.

"Despite this strengthening, however, the pace of growth is modest and suggests a limited prospect of any further materially downward pressure being exerted on the unemployment rate," he said in a research note.

"As a result, the Bank of Canada is likely to continue to keep monetary conditions highly accommodative," he said.

Canada fared better than the United States and other major economies during the global recession and has since recovered all the lost jobs and output, but exports and manufacturing have yet to make a full comeback.

Ferley sees gross domestic product advancing between 0.1 and 0.2 percent in November and fourth-quarter annualized growth of 1.5 percent at best, well below the Bank of Canada's projection of 2.5 percent.

TD Securities economist Mazen Issa sees a risk that growth will even come in below his estimate of 1.2 percent.   Continued...