- David Watt, chief economist at HSBC Canada
Canada's manufacturing sales unexpectedly declined in September to the lowest level since May, led by lower receipts in the automobile and petroleum industries, with August's data also revised downwards. Sales dropped 1.5% to C$51.1 billion, according to Statistics Canada, whereas economists had predicted a 0.2% increase. Moreover, the August figure was revised to a 0.6% drop from an earlier reading of 0.2%. Statistics Canada blamed September's decline on lower motor vehicle assembly and oil product sales. Motor vehicle assembly sales plunged 10.3% to C$5.05 billion following four months of gains. Oil companies are reducing investment as prices remain below $50 a barrel. Petroleum and coal-product sales plummeted 7.1% to C$4.83 billion in September, and dived 28% from the same month a year earlier. Manufacturing sales declined in 13 of 21 categories tracked by Statistics Canada, making up 79% of production.
The freshly released manufacturing data fuels some doubt around the strength of the Canadian recovery in the second half of 2015. In October, the BoC kept its interest rate at 0.5%, citing persistent slack in the economy. It also revised Q3 growth outlook from 1.5% to 2.5%, while the latest Canadian GDP figure for August revealed growth of 0.1%.
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