Canada’s manufacturing sector recovery slows in October - TD Bank Financial Group

According to ActionForex, analysts at TD Bank Financial Group note that Canadian manufacturing sales increased 0.3% (m/m) in October, below Statistics Canada’s preliminary flash estimate (0.6%). 

"This follows an upwardly revised 2.2% increase in September (previously reported as 1.5%). The release leaves the level of manufacturing sales around 3% below its pre-pandemic (February) levels."

"The picture was less encouraging after controlling for price effects, with manufacturing shipment volumes flat on the month.

The increase was not broad based across industries. Only 10 of the 21 industries saw sales increases. The headline increase was largely driven by higher sales of paper products (+5.4%), petroleum and coal products (+3.1%), and primary metals (+2%)."

"The below-expectations print for manufacturing sales in October was worsened by flat volumes growth. Like most other areas of the economy, momentum in Canada’s manufacturing sector has been losing steam. Importantly, this backward-looking release doesn’t fully capture the potential impacts of renewed restrictions domestically and abroad on demand for some manufacturing products."

"Forward-looking indicators have turned more mixed of late. New and unfilled orders were notably weak. Meanwhile, employment growth in the sector has virtually stalled in the past two months, although growth in hours worked has been slightly more encouraging. The one respite is manufacturing sentiment, which has surprisingly held firm in Canada and the U.S. in November (Canada’s largest trading partner). The picture is being further clouded by elevated COVID-19 cases and renewed restrictions. Against this backdrop, the near-term path for the sector is expected to remain bumpy and uneven until vaccine rollouts accelerate in the spring of 2021."