Canada factory sales tumbled in bad omen for growth

Fri Feb 15, 2013 11:18am EST
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By Louise Egan

OTTAWA (Reuters) - Canadian manufacturers ended 2012 on a dismal note, registering the biggest monthly decrease in sales since the Great Recession, a drop that suggests growth again disappointed in the fourth quarter.

Manufacturing sales fell 3.1 percent in December from November, the sharpest decline since May 2009 in seasonally adjusted terms, due mainly to weaker auto production but also to lower sales in 16 of 21 industries, Statistics Canada said on Friday.

The news drove down the Canadian dollar and disappointed investors, who expected a milder 0.8 percent decrease. Factory sales rose 1.9 percent in November but struggled to gain traction overall last year.

"You can't really paint a more negative picture of Canada's manufacturing sector than what we saw with the December shipments report," said Sal Guatieri, senior economist at BMO Capital Markets.

Manufacturers have been hard hit by a strong Canadian dollar and tepid U.S. demand for their products, and they have yet to see sales climb back to pre-recession levels.

"The report clearly underscores that Canadian manufacturers need U.S. consumers and businesses to ramp up their spending to see some revival this year," said Guatieri.

Excluding the heavyweight auto sector, sales fell 1.8 percent, dragged down by chemicals, energy products and fabricated metals.

In volume terms, overall sales sank 3.8 percent.   Continued...

File photo of Bombardier q400 airplanes are seen being assembled at the Bombardier aircraft manufacturing facility in Toronto, November 25, 2010. REUTERS/Mark Blinch