* Sales plunge 2.4 percent
* Analysts had expected a 0.3 percent increase
* Lower sales of petroleum, coal and primary metals to blame
* Some refineries reported slowdowns longer than usual
* Inventories reach record high
By David Ljunggren
OTTAWA, June 14 Refinery slowdowns helped push
Canadian factory sales to their biggest monthly drop in nearly
four years in April, signaling a weak start to the second
quarter after strong economic growth in the first three months
of the year.
Statistics Canada said on Friday that sales plunged by 2.4
percent in April from March, the fourth drop in five months and
the biggest retreat since the 2.5 percent fall recorded in
Canadian growth in the first quarter was 2.5 percent on an
annualized basis, much higher than the Bank of Canada's 1.5
percent forecast in April. The central bank sees 1.8 percent
growth in the second quarter.
Analysts, who had expected a 0.3 percent increase in
month-on-month factory sales, variously called the April figures
upsetting, ugly, very weak and disappointing.
"The month's factory sector weakness suggests April GDP
could eke out, at best, an only mild gain," said Emanuella
Enenajor of CIBC World Market Economics. Statscan will release
the April GDP data on June 28.
April sales were down 3.3 percent from April 2012, while
volumes decreased 3.5 percent over the same period.
The report came after recent data showed near record jobs
gains and strong housing starts in May.
Factory sales were down in 13 of 21 industries, representing
about 86 percent of Canadian manufacturing. Constant dollar
sales fell by 1.6 percent on lower sales volumes.
"This will weigh heavily on monthly industry GDP and is
consistent with our expectation for a deceleration to below
trend economic growth in the second quarter," TD Securities
macro strategist Mazen Issa said in a note to clients.
The Canadian dollar initially softened to C$1.0177
to the U.S. dollar after the data was released, weaker than
Thursday's finish of C$1.0166, or 98.37 U.S. cents.
Petroleum and coal product sales plummeted 8.8 percent in
April and are down 14.0 percent since November 2012. Petroleum
refineries account for 93 percent of sales in the petroleum and
coal product category.
"In April, some refineries reported that either maintenance
or the switch to summer fuels required production to be slowed
or halted for a longer than normal period of time," Statscan
said in its daily commentary.
Primary metal sales dropped by 8.7 percent in April to the
lowest level since May 2010.
Inventories rose by 0.6 percent - the fourth consecutive
monthly increase - to a record high. The inventory-to-sales
ratio rose to 1.43 in April from 1.39 in March, matching the
1.43 recorded in October 2009.
"This cools the mood a bit on Canadian fundamentals after
the robust employment and housing starts received recently,"
said Desjardins Capital Markets strategist Jimmy Jean.
Statscan revised March's drop in factory sales to 0.6
percent from an initial 0.3 percent and February's advance to
3.5 percent from 2.8 percent.