Canadian manufacturing activity stalled in September despite a tailwind from higher energy prices, Statistics Canada reported on Friday. Factory shipments were little changed from the month before at a seasonally adjusted 80.25 billion Canadian dollars, a tick firmer than the agency’s early estimate, after an upwardly revised 1.8 percent increase in August. Compared with a year earlier, sales were up 10.9 percent in nominal terms.
The real picture was weaker. In volume terms, manufacturing sales fell 1.5 percent in September and were down 1.4 percent on a year earlier. Sales of petroleum and coal products rose a strong 10 percent on the month on prices; excluding that segment, overall manufacturing sales fell 1.5 percent. Sales declined in 11 of the 21 sectors tracked, led by primary metals and wood products. On a quarterly basis, manufacturing sales rose 1.7 percent to about 239.3 billion dollars, a fifth consecutive quarterly increase, but the quarter ended soft.
Wholesale trade fared better in value and no better in volume. Wholesale sales excluding petroleum, oilseed and grain merchants rose 0.7 percent to 92.46 billion dollars, stronger than the advance estimate of 0.5 percent and a recovery from a 1.4 percent drop the month before, with machinery, equipment and supplies leading on computer and communications equipment. Wholesale volumes still fell 0.2 percent, and nominal sales were up 7.8 percent year on year against a 1.5 percent volume gain.
The releases affirm Statistics Canada’s preliminary estimate that gross domestic product contracted 0.1 percent in September after little change in the prior two months, and September was the first full month under new 50 percent US tariffs on a slice of Canadian exports. For the Bank of Canada, which holds its rate at 2.50 percent and decides again on December 9, the data describe an economy where prices are doing the growing and volumes are shrinking. That is a different problem from the one the Federal Reserve is tightening into, and it is why the Canadian front end has not followed the US selloff this week.