Canada

Monday, January 20, 2020 - 12:04

MNI DATA PREVIEW: Canada Factory Sales May Post 5th Fall in 6M


--Railway Strike Curbed Shipments Following UAW Strike

OTTAWA (MNI) - Canada will likely report the fifth decline in factory sales in six months for November, with shipments disrupted again by labor strikes.

Sales declined 0.4% according to the MNI economist median, following a 0.7% October decline. While the previous report showed disruptions from a UAW strike that hit auto production, November is hurt by a CN railway worker strike.

The declines could again pull down GDP on the month and take fourth-quarter growth further away from the BOC's estimate to below a 1% annualized pace. The report comes a day before the central bank is expected to leave its benchmark rate at 1.75% and affirm a neutral stance, though some investors see a rate cut coming in the next few months as weak growth lingers.

Slow sales growth has helped boost the factory inventory-to-sales ratio to 1.54 in October, close to the highest record since 2009.

Manufacturing is among industries most exposed to trade fights that have cut global growth estimates and led companies to break up their supply chains.

Auto production may see a partial rebound in November after the UAW strike, economists say. That and the end of the rail strike in November are signs that factory sales will pick up again in future reports.

Still, few experts see manufacturing as strong enough to lead growth this year, especially since while GM workers ended their strike, the company closed a factory in Ontario late last year.

--MNI Ottawa Bureau; +1 613 981-1671; email: anahita.alinejad.ext@marketnews.com

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