Canada August factory sales fall 2.0% after three months of gains

FILE PHOTO: Rolls of steel are seen at ArcelorMittal Dofasco in Hamilton, Ontario, Canada, March 7, 2018. REUTERS/Peter Power

OTTAWA (Reuters) - Canadian manufacturing sales fell by 2.0% in August, following three months of consecutive gains, dragged down by a pullback in automobile and parts sales, Statistics Canada said on Friday.

The decline was in line with Statscan’s preliminary estimate for the month, but below analyst expectations of a drop of 1.4%. Manufacturing sales remain 6.6% below pre-pandemic levels, Statscan said.

The largest declines were in transportation equipment, down 13.7%, mostly on lower sales of motor vehicle assembly and parts. Excluding transportation equipment, factory sales rose 1.1%.

“As expected, much of the drop came from a pullback in auto production/sales after unusually strong July levels when factories worked to replace lost production during spring lockdowns,” said Nathan Janzen, senior economist with RBC Economics, in a note.

“September sales probably looked better, but rising virus spread (is) raising downside risks beyond that,” he added.

New COVID-19 infections in Canada have jumped in recent weeks, prompting some provinces to impose targeted shutdowns in hot spots to try to curb the spread.

Manufacturing sales fell in four provinces in August, led by a 4.8% decline in Ontario, Canada’s auto manufacturing hub. Sales declined in nine of the 21 industries tracked by Statistics Canada.

It also revised July’s gain to 7.2% from 7.0%.

The Canadian dollar was trading 0.1% higher at 1.3206 to the greenback, or 75.72 U.S. cents, after the data, recouping some of the week’s decline.

Reporting by Julie Gordon and Steve Scherer in Ottawa; Editing by Chizu Nomiyama