By Robb M. Stewart
OTTAWA--Canadian manufacturing activity retreated in October, with sales falling amid weakness in chemical and wood products and transportation equipment.
Factory shipments dropped 1.0% from the month before to a seasonally adjusted 71.51 billion Canadian dollars, the equivalent of about $51.91 billion, Statistics Canada said Monday.
The pullback was slightly softer than the data agency's advance estimate for monthly decline of 1.1%, following the 3.3% rise in sales in September to the highest level in seven months.
Compared with a year earlier, manufacturing sales in October were up 0.7%.
Sales in volume terms fell 1.5% for the month, matching the pace of weakness in product prices, and were 3.2% lower than a year earlier.
Manufacturers have shown signs of recovering from the hit earlier in the year from the Trump administration's tariffs, which sapped demand in the U.S. and dampened business investment in Canada. S&P Global's Canadian manufacturing purchasing managers index firmed in October, only to weaken again the next month as it showed an industry in contraction for a 10th successive month with steeper declines in output and new orders.
The decline in factory sales for October fits with expectations the economy began the final quarter of the year on rocky footing, following a sharp rebound in the third quarter. Statistics Canada previously estimated industry-level gross domestic product fell 0.3% in October from the month before, which would mark the sharpest contraction since December 2022.
Data released last week showed that wholesale trade edged up 0.1% in October, while an advance tally of receipts indicates retail sales were essentially unchanged for the month.
Statistics Canada's manufacturing survey sales in October were down in 11 of the 21 categories it tracks, led by a fall in chemical product shipments following increases the two previous months.
Wood product sales fell sharply for the month and against a year earlier, affected by recent U.S. duties on Canadian lumber that has prompted production shutdowns and the closure of several sawmills.
After a strong rise in transport equipment shipments the month before, sales fell in October with production of aerospace product and parts down steeply and motor vehicle sales easing after auto production was disrupted by a semiconductor chip shortage.
Canadian transportation equipment manufacturers sell some two-thirds of their products to the U.S., which accounted for roughly one-quarter of total exports of manufactured products to U.S. last year.
Excluding motor vehicles, parts and accessories, manufacturing sales declined 1.1% from the month before.
Inventory levels held by factories were 0.7% lower in October, the first drop in six months, the agency said. Unfilled orders, the stock of orders that will contribute to future sales if they aren't cancelled, edged up 0.1% for the latest month to the second-highest level on record. New orders were down 0.4%.
The Bank of Canada, which last week left its policy interest rate unchanged following back-to-back cuts, continues to project weak economic growth in the final quarter of the year and a soft 1.1% annualized expansion in 2026.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
12-15-25 0902ET
