"It's likely going to be a bumpy road for manufacturing for some time,"
- Mazen Issa, Canada macro strategist at TD Securities
Sales of Canada factory's products surged in May, supported by gains in chemicals and metals, while inventories dropped from a record high, government figures showed Tuesday. Sales advanced 0.7% to $48.6 billion in May, leaving shipments 3.2% below their level a year earlier. Analysts, however, expected a slightly stronger reading of 0.8%. At the same time, sales of durable and non-durable goods jumped 1.3% and 0.2% respectively. The biggest gains were recorded in chemical industry, where sales surged 5.1% to 4.0 billion, mainly due to higher fertilizer sales. Another bright spot was the number of new orders, which soared 1.8% to $49.0 billion, because of higher order in the transportation equipment industry, adding to signs that sales will continue gaining momentum.
Despite strong data, earlier reports showed mixed signals, as retail sales and inflation came below forecasts, reflecting weak domestic demand and vulnerability of economic recovery. A gauge of consumer prices climbed 0.7% last month from the same month a year earlier, following a 0.4% gain in April that was the slowest since October 2009. In addition to that, the value of sales edged higher 0.1% totalling 39.52 billion Canadian dollars, compared with an unrevised flat reading in March, adding pressure on the newly-appointed Governor of the nation's central bank to assure that growth will be stable.
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