Canada: Manufacturing activity is poised to contract – TD Securities

According to analysts at TD Securities, Canada’s manufacturing activity is poised to contract 1.9% in June owing to a pullback in transportation equipment and lower prices for industrial goods.

Key Quotes

“Motor vehicle shipments have been unusually volatile over the last few months owing to the transitory impact of plant shutdowns, but preliminary production figures and exports both point to partial giveback of last month’s 13% gain.”

“Aerospace exports also point towards a pullback, while fabricated metals will benefit from the removal of steel and aluminum tariffs on USbound shipments. Elsewhere, a sharp pullback in gasoline prices will weigh heavily on nominal sales of refined petroleum products, while a 0.5% decline in ex-petroleum prices will weigh on nominal sales for the whole manufacturing sector. As a result, real manufacturing sales should see a more modest decline of 1%, leaving them up roughly 6% q/q (ann.) in Q2.”