Canada's manufacturing sales in July are expected to dip slightly, with chemicals and metal products showing significant drag.

(1) Data from Statistics Canada released on Monday indicates that factory sales in July are most likely to have declined by 0.2% compared to the previous month, mainly due to weaker sales in the chemical products and metal products sub-sectors. (2) This preliminary estimate is based on a weighted response rate of 69.8%, while the average weighted response rate for this survey over the past 12 months has been 92.5%. The sample coverage rate this month is noticeably low, suggesting substantial room for adjustment in the final revised data. (3) From a breakdown perspective, simultaneous declines in the chemical products and metal products segments suggest that end demand may have experienced a temporary cooling during the month, possibly related to client inventory reduction rhythms and fluctuations in raw material prices. (4) However, considering that flash estimates are typically based on incomplete samples and that this round’s response rate is markedly below the historical average, the market should interpret the 0.2% month-on-month decline with caution, as there is potential for upward revision when the official release occurs later. (5) The marginal weakening of Canadian manufacturing sales, combined with previously mixed signals from US economic data, has intensified short-term divergence regarding North American industrial activity sentiment. After the data release, both the Canadian dollar exchange rate and government bond yields fluctuated within a narrow range.