Factory sales drop unexpectedly in March
By David Ljunggren
OTTAWA (Reuters) - The value of Canadian manufacturing shipments in March dropped unexpectedly to a near 10-year low, tempering optimism that the economy is showing signs of recovery.
Statistics Canada said on Friday that March shipments dropped by 2.7 percent to C$41.4 billion ($35.1 billion), the lowest level since the C$41.3 billion recorded in May 1999. Analysts had expected a 1.0 percent increase.
Manufacturing sales have now dropped almost 25 percent since their peak in July 2008, with most of the decline occurring between November 2008 and January 2009.
"Overall, this week has delivered up, not just in Canada, an economic picture that has challenged the markets' embrace of the green shoots story. The grass is green but the frost at night has turned the begonias black," said Stewart Hall, an economist at HSBC Securities.
Finance Minister Jim Flaherty said last week that he saw signs the recession was softening.
Statscan blamed the March drop on weak performances from durable goods industries and the primary metals products sector.
Constant dollar manufacturing sales, which are measured in 2002 prices, fell by 2.4 percent to C$38.2 billion, the lowest level since the C$37.1 billion posted in July 1998.
"March's results continue to support our view that Canada will be mired in weakness for some time yet," said Derek Holt and Karen Cordes of Scotia Capital research. Continued...