"Now that interest rates appear to be going nowhere fast, sales activity in the near term may be held in check by homebuyers who are in less of a hurry to purchase"
-Gregory Klump, the real estate association's chief economist
Canada's factory sales increased more than expected in September, adding to previous gains, on the back of solid food sales and swelling new orders. Sales rose 1.0% to C$50.1 billion, the highest level in more than one and a half year, increasing in most of 21 categories tracked by Statistics Canada, and beating economists' forecasts of 0.2% contraction. Although, production is 2.6% above the levels seen a year earlier, moving closer to their post-recession peak set at the end of 2011. According to the Bank of Canada, business investment and exports remain weak in an economy driven by consumer spending, as companies wait for signs of expansion abroad. At the same time, food sales propelled 6.9% over the corresponding period, posting the largest monthly gain over the last two decades. Chemical sales climbed 2.8%, while the main downside pressure came from the transportation equipment along with the motor vehicle assembly, where sales plunged 1.7% and 1.9%, respectively.
While analysts are expecting to see a substantial decline in the manufacturing shipments due to the weaker exports, a solid rise in food sales are suggesting they can outweigh weak performance of manufacturing sector, and become one of the main contributors to economic growth in the nearest future.
© Dukascopy Bank SA