OTTAWA – Canadian factory sales fell more than expected in May as the auto sector was hurt by an earthquake in Japan and the Alberta wildfires slowed sales by the oil industry.
Statistics Canada said Friday that manufacturing sales fell 1.0 per cent to $49.9 billion in May. Economists had expected a drop of 0.7 per cent, according to Thomson Reuters.
Constant dollar sales fell 2.1 per cent, indicating that a lower volume of manufactured goods was sold in the month.
“The decline in this month’s report was slightly larger than expectations, though is largely a result of transitory disruptions to supply chains,” TD Bank economist Warren Kirkland said.
Kirkland said while the auto industry’s woes should dissipate in June, the effects from the wildfires will likely persist, and he expects a 0.9 per cent contraction in GDP during the second quarter.
Motor vehicle sales fell 4.2 per cent to $5.6 billion, while sales of motor vehicle parts declined 2.3 per cent due in part to supply interruptions associated with the earthquake in southern Japan in April.
Sales in the petroleum and coal products industry fell 2.2 per cent to $4.1 billion due in part to the wildfire that forced the evacuation of Fort McMurray, Alta., and curbed oil production.
Statistics Canada said the drop was due entirely to lower volumes as prices for the industry climbed 6.4 per cent, according to the industrial product price index.
In addition to its regular survey, the agency also asked manufacturers about the impact of the Alberta wildfires.
It noted that 5.4 per cent of those surveyed said their businesses were affected, with about 40 per cent of those reporting a loss of sales. The remainder said they were affected but not able to quantify the effects of the fire.
Firms affected by the fire were not limited to just Alberta or the petroleum and coal products sector. The report noted that while most were in Alberta, 48 companies in Ontario, 27 in B.C., 17 in Saskatchewan and 12 in Manitoba said they were affected.
Overall, sales fell in 15 of 21 industries, representing nearly 70 per cent of total manufacturing.