The Financial Post reports in its Thursday, Oct. 17, edition that weak manufacturing sales are contributing to the evidence that Canada's third quarter gross domestic product will fall significantly below the Bank of Canada's expectations, likely increasing calls for policy-makers to consider more aggressive rate cuts.
The Post's Gigi Suhanic writes that according to Statistics Canada, manufacturing sales decreased by 1.3 per cent in August compared with July, reaching their lowest level since January, 2022. This decline was primarily driven by decreases in metals, petroleum and coal. Year-over-year, sales dropped by 4.4 per cent.
The reduction in sales and volumes, along with a decline in inventories, suggests that the manufacturing sector's GDP weakened, as noted by Statscan in its commentary accompanying the preliminary estimate indicating that GDP was unchanged in August. Capital Economics economist Stephen Brown highlighted these points in a recent note.
While GDP increased by 0.2 per cent month-over-month in July, a flat early estimate for August, released on Sept. 27, indicates that third quarter growth will likely fall short of the BOC's forecast of 2.8 per cent.
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