Canadian factory sales recorded a stronger- than-expected rebound in May, adding to signs of improving health for the nation's manufacturers.
The value of factory sales rose 1.4 per cent, more than making up a 1.1 per cent decline the previous month, Statistics Canada reported Tuesday from Ottawa. The May increase came as gains in machinery helped make up for a sharp decline in auto production during the month. Economists had been anticipating a 0.4 per cent gain for May according to a Bloomberg survey.
The recovery highlights how manufacturing is benefiting from a robust U.S. economic expansion and a weaker Canadian dollar, and the gains should reinforce expectations that factories will continue to provide a bigger contribution to growth than they have for much of the past decade -- particularly as consumer spending slows.
Sales in May rose in 14 of 21 industries, representing 64 per cent of the total. Excluding autos, sales were up 2.6 per cent, the fastest since 2011. The gain was driven by an 8.9 per cent gain in machinery sales. In volume terms, total sales were up 0.9 per cent.
The strong increase in other sectors masked a sharp drop in motor vehicle shipments, down 6.6 per cent. In previous reports, Statistics Canada said there were supply disruptions in the sector during the month.
Other indicators show the outlook for shipments remains positive. New orders were up 4.9 per cent in May, and are 11.9 per cent above year ago levels.
With this release, Statistics Canada also begun publishing monthly capacity utilization rates for manufacturing. Unadjusted capacity utilization increased to 81.9 per cent in May, from 80.6 per cent in April, the statistics agency said.