Canadian Factory Sector in Great Distress

February 16, 2009

Manufacturing sales fell another 8.0% in December after a 6.2% drop in November, and such contracted 18.2% over the final five months of 2008.  Auto sales plunged 14.2% in the latest month.  New orders slumped 12.9% in December, 12.7% in November and 22.8% between July and December.  the 1.50 ratio of inventories to sales was 0.25 points higher than in July.  all but one of 22 manufacturing sectors experienced reduced sales at the end of 2008.  These much weaker-than-expected figures suggest that recently revised Bank of Canada growth forecasts were not bearish enough.  The central bank in January revised projected 4Q08 GDP to negative 2.3% saar from -0.4% and looked for negative 4.8% growth in the present quarter, a revision from zero assumed last October. Quarterly GDP on a national income accounts basis will be released March 2nd.  November GDP on an industry basis fell by 1.7%, including drops of 1.5% in industrial production and 1.3% in all goods-producing industries.  A 3.8% drop in goods GDP in the year to November was the greatest 12-month decline since the first quarter of 1982. A separate data release today indicated that Canadians were net sellers of foreign securities in December, and foreigners also were net sellers of Canadian securities that month.  Securities transactions generated a C$ 3.54 billion net inflow in December and an inflow of C$ 8.46 billion per month in the fourth quarter.  As in the Great Depression, the global recession has been characterized by sharply lower two-way trade and capital movement flows.  Virtually all economies have been affected to some extent.

Copyright 2009 Larry Greenberg.  All rights reserved.  No redistribution without express permission.



Comments are closed.