* Sales fall 1.4 pct vs estimate of no change
* Motor vehicles, primary metals post big drops
* Data confirms Canadian economy struggling to advance
By David Ljunggren
OTTAWA, Dec 14 Canadian manufacturing sales
unexpectedly plunged by 1.4 percent in October from September in
the latest sign the economy is struggling to cope with market
problems abroad and due to the effect of a strong Canadian
Statistics Canada said on Friday that the drop - the biggest
in nine months - was due to weakness in major sectors such as
motor vehicles and primary metals.
Analysts had expected no change in manufacturing sales.
Statscan revised September's performance to unchanged from an
initial 0.4 percent increase.
"A slowdown in emerging market growth and uncertainty
related to the fiscal crises in both the U.S. and Europe have
all led to a deceleration in global economic momentum,
especially in the second half of this year," TD Economics
economist Francis Fong said in a note to clients.
The October drop was the greatest since a 2.4 percent
retreat in January 2012.
Analysts said the poor performance would affect October's
growth figures, due to be released next Friday.
The Bank of Canada has predicted fourth-quarter growth of
2.5 percent, annualized, which now looks rather optimistic.
Canada's economy grew at a sluggish 0.6 percent pace,
annualized, in the third quarter.
"While this (manufacturing) is only one data point,
extrapolating this for the (fourth) quarter as a whole would
suggest a quarterly annualized rate of growth a touch below 1
percent," said TD Securities strategist Mazen Issa.
The Canadian dollar initially eased slightly to a session
low against its U.S. counterpart, to C$0.9852 versus the
greenback, or $1.0150, from around C$0.9845, or $1.0157 before
the release. It later recouped the losses.
The October manufacturing report was weak across the board
and showed sales declined in 12 of 21 industries, representing
about 71 percent of the manufacturing sector.
In volume terms, sales were down 2.4 percent, the biggest
decline since a 2.7 percent drop in January 2012.
Sales in the motor vehicle assembly industry dropped by 3.7
percent to C$4.4 billion ($4.5 billion) while primary metals
sales were down 2.8 percent to C$3.7 billion. The declines were
partly offset by advances in the petroleum and coal product
industry, where sales rose by 2.0 percent to C$7.4 billion.
The inventory-to-sales ratio advanced to 1.36 from 1.32 in
September while inventories grew by 1.3 percent. Unfilled orders
were flat while new orders fell by 0.6 percent.
Statscan outlined another area of weakness on Tuesday when
it noted imports had dropped to a 15-month low in October.
Some analysts, though, looked to the United States for
inspiration, saying prospects there were good if Washington
could avoid the so-called "fiscal cliff" next year - referring
to steep tax hikes and spending cuts that kick in early in 2013.
"The second half of 2013 is expected to be more prosperous
for manufacturers as the US is expected to grow more robustly,"