Statistics Canada recently reported that the prices for industrial goods and that of raw materials have continued falling in August 2009. Generally, the two prices indices have been on a decline since August 2008.
The decline in these price indices suggest a lull in the demand for goods used in manufacturing. This implies that manufacturing supply chains have yet to generate large demand for raw material, which further suggests that manufacturing may continue to remain sluggish for another six to eight months, depending on the inventory levels.
The US on the other hand is reporting an expansion in the manufacturing sector. In fact, the manufacturing sector in the US reported its best month in October 2009 since April 2006. Other economies including China and the UK have also experienced expansion in manufacturing. Is Canada lagging behind other G7 economies? If yes, could this be because of a modest Canadian stimulus?
Source: WSJ.com
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