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Canadian manufacturing sales fell in September as chip shortage hurt auto sector


Canadian manufacturing sales fell three percent to $58.5 billion in September as motor vehicle sales fell due to the ongoing shortage of semiconductors that has hurt auto production.

Statistics Canada said Monday sales of motor vehicles fell 35.6 percent to $1.9 billion, the lowest level since May 2020, while sales of motor vehicle parts dropped 13.5 percent to $1.8 billion.

Meanwhile, higher prices helped petroleum product sales rise three percent to $6.7 billion in September.

Stephen Brown, senior Canada economist at Capital Economics, said renewed closures of auto plants weighed heavily on manufacturing sales in September.

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“While many factories reopened again this month, there is still a chance that overall manufacturing sales volumes will fall again this quarter, albeit more modestly than in the third,” Brown wrote in a report.

The auto sector has been hit hard by the global shortage of semiconductor chips due to pandemic-related production issues and a surge in demand for electronics. The shortage has forced auto producers to slow or halt production around the world.

Brown noted that even when the transportation sector was excluded that manufacturing sales fell by 0.8 percent on a month-over-month basis.

Total manufacturing sales in constant dollars fell 4.2 percent in September, indicating a lower volume of goods sold.

In a separate report, Statistics Canada said wholesale sales rose one percent in September to $71.3 billion.

The increase came as the miscellaneous goods subsector rose 5.9 percent due to a 20.9 percent increase in sales in the agricultural products industry as demand for potash domestically and internationally rose.

Offsetting some of the increase was a two percent drop in wholesale sales of motor vehicles and motor vehicle parts and accessories in September.

Building material and supplies wholesalers also saw sales drop 1.4 percent.