OTTAWA (Reuters) - The value of Canadian manufacturing shipments plummeted a record 8.0 percent in December from November in yet another stark sign of how the global crisis is battering Canada.
The drop — the fifth consecutive month-on-month decrease — was far steeper than the 5.3 percent fall predicted by analysts and was the worst since Statistics Canada adopted its current method of calculating the data in January 1992.
Statscan released the data on Monday and slightly revised November’s month-on-month fall to 6.2 percent from an initial plunge of 6.4 percent.
Recent Canadian economic numbers have been little short of calamitous. Job losses in January were the biggest on record while sales of previously owned homes last month were 41 percent down from a year earlier.
As if that were not bad enough, Canada posted its first trade deficit in almost 33 years in December.
Finance Minister Jim Flaherty told Reuters in Rome on Saturday that “I expect the numbers of all kinds to continue getting worse month after month this year.”
The gloomy statistic helped cement analyst predictions that the Bank of Canada would once again trim rates early next month. The central bank has cut its key rate by 350 basis points since December 2007 to a 50-year low of 1 percent.
“(This) lends support to a further 50 basis points cut by the Bank of Canada on March 3,” said Derek Holt and Karen Cordes of Scotia Capital Research.
The Canadian dollar, which had already opened lower, slipped on the data and by 1:30 p.m. EST (1830 GMT) was at C$1.2446 to the U.S. dollar, or 80.35 U.S. cents, down from Friday’s close of C$1.2341 to the U.S. dollar, or 81.03 U.S. cents.
The Toronto stock market was closed for a market holiday.
Statistics Canada said just over half of December’s drop reflected price declines. Constant dollar manufacturing sales, which are measured in 2002 prices, fell 4.4 percent in December from November to their lowest level since November 1998.
Falling prices pushed the value of petroleum and coal product sales down 18.4 percent in December to C$4.4 billion ($3.5 billion), compared with the peak of C$8.2 billion in June 2008. Sales by primary metal manufacturers dropped 14.4 percent on lower prices and weakening global demand.
In December, 20 of the 21 manufacturing industries recorded declines. New orders fell a record 12.9 percent while the inventory-to-sales ratio hit 1.50, a level not seen since October 2001.
“That (ratio) would support further production cutbacks,” said Scotia Capital Research’s Holt and Cordes.
Statistics Canada will release figures for December’s wholesale trade on Wednesday. Analysts are expecting a 2.0 percent fall from November.
Editing by Matthew Lewis and Maureen Bavdek