(Reuters) – Canadian factory sales jumped by a record 10.7% in May from April but fell far short of where they had been when partial shutdowns were imposed to fight the coronavirus outbreak, Statistics Canada said on Wednesday.
Analysts in a Reuters poll had forecast a gain of 9.5% in May. Statistics Canada revised the record-breaking April decline to 27.9% from an initial plunge of 28.5%.
Despite the jump, total manufacturing sales in May were 28.4% below their pre-pandemic level in February. Analysts generally agreed it would take at least a year for sales to fully recover.
“The fact that the road back for the goods sector looks so long is an indication of how far the economy is from completely healing as it faces fewer challenges than the services sector,” said Royce Mendes, a senior economist at CIBC Economics.
Canada shuttered most non-essential businesses, beginning in mid-March, and ordered people to stay at home but has since been gradually reopening its economy.
Of the 21 industries monitored by Statistics Canada, 18 rose, led by the motor vehicle, motor vehicle parts and petroleum and coal products segments. In volume terms, sales rose by 8.8%.
Sales in the transportation equipment industry rose 81.7%, partially recovering from a record 74.9% drop in April. That said, sales of motor vehicles and parts were down 79.1% compared with May 2019.
The overall inventory to sales ratio dipped slightly but was still far above pre-pandemic levels.
“As firms are under financial pressure due to the slump in sales, we suspect they will run down their inventories in the coming months, which will dampen the recovery,” Capital Economics analyst Stephen Brown said in a note.
“Moreover, it seems likely that demand in the auto industry will lag given high unemployment across the continent.”
(Reporting by David Ljunggren in Ottawa; editing by Jonathan Oatis)