Alberta manufacturing sales plunge

Manufacturing sales in Alberta plunged in November, according to Statistics Canada.

The federal agency reported Tuesday that sales in the province declined by 3.8 per cent to $6.5 billion “reflecting lower sales of petroleum and coal products.”

“Sales in the province were at their lowest level since January 2014. The decline was largely due to a drop in prices in the petroleum and coal product industry,” it said.

However, sales rose by 1.5 per cent on a year-over-year basis in the province.

Nationally, manufacturing sales declined 1.4 per cent in November to $51.5 billion, reflecting lower sales of motor vehicles, chemicals, primary metals and food. This was the third decrease in four months, said Statistics Canada.

On an annual basis, though, sales rose by 2.6 per cent.

“Considering the further improvement in U.S. manufacturing production and the lower Canadian dollar triggered by the recent collapse in crude oil prices, the drop off in Canada’s manufacturing sales is disconcerting,” said David Madani, economist with Capital Economics.

Josh Nye, economist with RBC Economics, said a second monthly decline in manufacturing sales is disappointing but it follows a fairly strong performance of the sector earlier in 2014.

“Looking ahead, we expect the recent drop in oil prices will provide a boost to Canadian manufacturers in 2015 as the effects of a stronger U.S. economy and weaker Canadian dollar more than offset any decline in petroleum refining,” he said.

Brian DePratto, economist with TD Economics, said fourth quarter GDP growth in 2014 is expected to be around 2.5 per cent, down slightly from the 2.8 per cent in the third quarter.

“However, (Tuesday’s) release, which marked the second straight month of manufacturing sales declines, creates some downside risk to this outlook as weaker domestic sales due to lower commodity prices weigh on manufacturers,” he said.

“In the larger scheme of things, despite slowing towards the end of the year, 2014 has seen a marked increase in manufacturing sales following a somewhat weak 2013. While the decline in commodity prices will weigh on manufacturing sales of certain types of machinery and goods, the low level of the loonie and increasing activity south of the border should provide support for Canadian manufacturers in 2015.”

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