- CIBC World Markets
Canada's manufacturing sales declined more than expected in January, as sales of petroleum and coal products plummeted to the lowest level in almost six years. Factory shipments dropped 1.7% to C$51.4 billion, the biggest decrease since August and against economists' forecasts for a 1.2% drop. Meanwhile, December's figure was revised down to 1.6% from 1.7%. Sales of petroleum and coal products sank 11.9%, reaching the lowest level since May 2009 as both prices and volumes declined. The industry has seen sales slump 35% in the last seven months as crude prices have fallen. Excluding petroleum and coal, sales fell 0.5%. Overall, 14 out of 21 industries reported declines, accounting for under half of the Canadian manufacturing market.
Canada's economy has been struggling amid a precipitous decline in the price of crude oil, the country's main export. In its latest interest-rate decision, the Bank of Canada said it expected most of the negative effect from lower oil prices to appear in the first half of 2015, with January likely to bear much of the damage. The central bank kept its benchmark interest rate unchanged at the March 4 rate decision, but that followed an unexpected quarter-point rate cut to 0.75% in January. The recent sharp weakening in the Canadian Dollar and surging demand from the US are predicted to boost manufacturing activity in Canada.
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