Josh Nye, Senior Economist at the Royal Bank of Canada (RBC), offered his take on Tuesday’s disappointing Canadian Manufacturing Sales data, which fell for the third consecutive month in November.
“It’s hard to get a clean read on how the manufacturing sector fared in November. A rail strike reportedly held back shipments in some sectors. Statistics Canada pointed specifically to a big drop in primary metal shipments which shaved 0.8 ppts off headline volumes in the month. But a rebound in the transportation sector following earlier labour disruptions in the US—an increase that likely won’t be repeated—provided some positive offset.”
“Transitory factors aside, the second half of 2019 wasn’t kind to Canadian manufacturers. What looked like the sector’s resilience in early-2019—while factory output in other countries declined—clearly faded as the year wore on. And the near-term outlook is mixed. External trade headwinds appear to be easing, but a survey of purchasing managers points to muted growth in the sector heading into 2020, an inventory overhang needs to be worked off, and the closure of GM’s Oshawa plant will permanently reduce motor vehicle output.”