Well it was to be expected; with our southern neighbor having a difficult time in the sales department (although consumption was up in October, removing gas and cars from the equation shows sales growth of 0.2% as anemic). StatsCan just released the September manufacturing data, and sales are off 0.6% for the month, in constant dollars sales are off by 1.4% -- manufacturing sales are still up 11% from the March 2009 low, but as the chart shows Canada
Of course a month doesn’t a trend make, especially since the bulk of the shortfall (7%) came from Aerospace (a particularly volatile sector), but the automobile sector was also off by 10% -- which considering consumption figures in America were largely the result of demand for new vehicles – should we read something here with regards to U.S. consumption for the rest of 2010? Unsurprisingly, the material and energy segments are both up, but then they have less scope for dramatic rebound (oil and gas flows are predictable and steady).
With motor vehicles and aerospace being the biggest losers it follows that Quebec (-2.3%) and Ontario
Overall, this confirms that the BoC was right to stop raising interest rates. Canada ’s economy is slowing dramatically, the 2010 GDP forecast that were around 3.6% in January have been revised four times since, and the BoC’s 3% GDP growth for the whole year now appears to be wildly optimistic, a figure of 2.6% seems more probable, Vs. 3.1% for the U.S.
On the bright side inventory continue to fall (again StatsCan numbers) as to inventory to sales, but and this is more problematic “unfilled orders” declined. So we know that Canadian companies are very good at controlling inventory levels, but it may be due to a realization that order backlogs are not where they should be.
