Highlights
Manufacturing sales grew 1.4 percent on the month at the end of last quarter. The latest rise, which exactly matched expectations, followed a slightly smaller revised 1.8 percent decline in August and left shipments more than 18 percent lower on the year.
The September bounce mainly reflected a 16.4 percent jump in motor vehicle sales to their highest level since September 2008. Motor vehicle parts were also up an impressive 13.7 percent. Excluding this sector however, overall shipments fell a disappointing 0.4 percent from August.
Elsewhere, primary metals saw sales up 6.7 percent, helped by a number of plants restarting production after earlier maintenance shutdowns. Even so, some of these gains were offset by a near-29 percent slump in aerospace products, and this following a 34.2 percent nosedive in August.
Other industries recording falls were chemical products (2.5 percent) and petroleum and coal (1.6 percent).
Meantime, inventories declined 1.9 percent on the month, helping to reduce the inventory-sales ratio by 0.05 months to 1.44 months. This was the lowest reading since November and suggests that companies are much better placed to meet stronger demand out of current output as opposed to earlier production.
New orders surged 8.3 percent for their first rise since a 20.4 percent leap in June but backlogs fell 0.6 percent, their third consecutive drop and the fifth fall in the last six months.
Overall, the recovery in factory shipments is obviously good news for manufacturing industry in general and should point to a respectable performance in the current quarter. Nonetheless, the BoC's 2 percent real GDP growth call for the quarter just ended is currently looking very optimistic so even a good fourth quarter is unlikely to promote any serious speculation about a near-term shift in monetary policy.
Definition The dollar level of factory shipments for manufacturing durable and nondurable goods.
Why Investor's Care Manufacturer's shipments represent the monetary level of factory shipments for durable and nondurable goods and are a relevant indicator for an export-oriented economy. The data are used by analysts to evaluate the economic health of manufacturing industries. They are also used as inputs to GDP and needless to say, these data are used by the central bank in its decision-making process.
The monthly survey of manufacturing of which shipments is a part, provides a broad look at manufacturing activity levels. The level of activity in manufacturing can be affected by the level of interest rates which slows or stimulates the demand for goods and production. Shipments are an indication of how busy factories have been as manufacturers work to fill orders. The data not only provide insight to demand for items such as refrigerators and cars, but also business investment such as industrial machinery, electrical machinery and computers. Because a large proportion of shipments are headed south of the border to the U.S. and include a wide variety of durables, shipments are affected by U.S. economic activity as well as the exchange rate. Although the focus in this report is on shipments, it also contains information on inventories and new and unfilled orders.