Manufacturing sales dropped 6.4% in November, more than double market forecasts for a decline of 3%. The downside surprise was the result of sharp declines in both prices and volumes in the month, with sales in volume terms falling to the lowest level in almost 10 years. October's revised data showed a slightly smaller decline of 0.2% compared to the -0.5% that was reported in the preliminary data. Sales in volume terms recorded a 3% drop in November.

November's decline reflected lower sales in 12 of 21 industries reporting. Petroleum and coal sales fell by 20.6%, mainly reflecting lower prices for these products. Primary metals sales also fell due to lower prices, although this was exacerbated by weakening global demand. All provinces reported declining manufacturing sales activity in November.

Today's report was another in the long line showing that the Canadian economy weakened throughout the fourth quarter, with lacklustre October reports being followed by significantly slower data as the quarter progressed. The sharp 105,000 job cuts in November and December and weakening housing market activity was mirrored in the manufacturing data with constant dollar sales falling by 1.6% in October and an even greater 3% in November. The deepening global recession suggests that weak external demand for Canadian manufactured goods will persist.