Canadian factory sales beat estimates in June, rising for a fifth month, while Q2 output surged to a record $235.1 billion. Underlying volumes point to solid growth.
Alpha Score of 40 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Canadian factory sales rose 0.1% in June, edging past the consensus estimate for a 0.1% decline. It was the fifth consecutive monthly increase for the manufacturing sector.
Statistics Canada said sales reached $78.8 billion. Compared with a year earlier, sales were up 14.5%.
The headline number masked a sharper performance outside of energy. A 14.1% drop in petroleum and coal sales, driven by lower prices, pulled the index lower. Strip out that subsector, and manufacturing sales climbed 2.6% month over month. Constant-dollar sales, a proxy for volume, rose 1.2%.
Chemical sales jumped 6.0% to $6.3 billion, the highest monthly figure since October 2022. Transportation equipment advanced 2.8% to $12.4 billion. Within that category, motor vehicle parts rose 6.2% and aerospace products and parts gained 6.0%.
Second-quarter numbers showed broader momentum. Manufacturing sales surged 9.3% from the first quarter to a record $235.1 billion. The quarterly figure marked the fourth straight increase.
Petroleum and coal contributed strongly at the quarterly level, rising 33.7%. Transportation equipment climbed 14.7%. Excluding petroleum and coal, sales rose 6.1%. Constant-dollar Q2 sales were up 4.6%.
The quarterly data supports the view that the goods-producing side of the economy is expanding at a healthy pace. The Bank of Canada in July forecast second-quarter growth of 1.5%. The manufacturing report points to firmer growth in the quarter, likely in the 2% range, several analysts said.
Traders said the data gives the Bank of Canada room to hold its policy rate steady through the rest of the summer. Overnight index swaps price in roughly 40 basis points of easing over the next 12 months. Some market participants said the strong prints could force a reassessment of the rate-cut timeline if the trend continues into the second half of the year.
The Canadian dollar traded near C$1.3650 after the release, little changed on the session. Two-year government bond yields rose 2 basis points to 3.45%. The currency has been under pressure from lower crude oil prices. West Texas Intermediate has fallen 10% over the past month. The solid factory data provides a partial offset to that headwind.
The next scheduled test for the sector will be the July employment and trade reports, due Aug. 7 and Aug. 8.
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