OTTAWA (Reuters) - The value of Canadian manufacturing shipments slipped in October from September, while third-quarter household net worth showed its largest drop in 10 years, reflecting the growing impact of the global financial crisis.
Statistics Canada said on Tuesday manufacturing shipments dropped 0.5 percent month to month in October, pulled lower by weaker prices for coal and petroleum products. The drop -- the third consecutive decrease -- matched market expectations.
Statscan also revised September’s overall figure to a loss of 0.2 percent from an initial increase of 0.1 percent.
In another sign of trouble, the actual volume of shipments dropped by 1.8 percent from September to their lowest since December 2001.
Stewart Hall, an economist at HSBC Securities, said this spoke “loudly to the greater global economic condition and the onset of economic slowdown in Canada”.
The value of petroleum and coal product sales dropped by 7.3 percent in October, largely due to a 13.5 percent drop in prices. Sales in this sector are now 18.1 percent lower than the peak reached in June 2008.
The Canadian dollar was little changed on the news but later posted modest gains.
Before the current crisis struck, manufacturers were struggling to deal with high energy prices, increased foreign competition and the stronger Canadian dollar.
Now they are suffering from the recession in the United States, which takes 75 percent of all Canadian exports.
“The bigger than expected drop in October manufacturing shipments suggests that slackening global demand is beginning to adversely affect the performance of the Canadian manufacturing sector,” said Millan Mulraine, an economics strategist at TD Securities.
“Moreover, with the massive drop in real shipments, it does appear that manufacturing sector activity may become a drag on overall Canadian economic activity.”
In October, eight of the 21 manufacturing industries -- accounting for about 40 percent of total sales -- posted declines. Statscan said the transportation equipment industry rose by 2.3 percent, pushed up by a 23.7 percent increase in aerospace products and parts output.
The manufacturing sector is weakening at the same time that Canadians are seeing the value of their assets sink.
Canadian equity markets fell more than 18 percent in the third quarter, dragging down household net worth by 3.2 percent from the second quarter.
The overall decline was the largest since the 3.6 percent drop recorded in the third quarter of 1998, when Canadian stocks fell during the Asian financial crisis.
Reporting by David Ljunggren; Editing by Frank McGurty