Canadian economic signals on Friday pointed to sluggish growth, while data showed consumers continue to add to already high debt loads, a trend the Bank of Canada has expressed great concern about. Canadian manufacturing sales declined 0.8 percent in April from March, Statistics Canada said on Friday.
Much of the drop was explained by fluctuations in the volatile aerospace industry and by temporary oil refinery shutdowns, but it still marked a weak start to the second quarter at a time when Europe's debt problems are shaking the global economy.
Statscan also reported that the ratio of Canadian household debt to income continued to rise in the first quarter, to a record 152.0 percent from 150.6 percent in the fourth quarter of 2011.
The Bank of Canada said in its Financial System Review on Thursday that its high household-debt level continued to present the greatest danger to financial stability in Canada. It said the fourth-quarter figure was already higher than levels in the United States and Britain.
As Canadians' debt increased, the manufacturing data spurred concern about the economy's strength.
"Today's data raise some doubts that April gross domestic product will spring forward as robustly as some had been hoping," said Emanuella Enenajor, economist at CIBC World Markets.
Data next week on wholesale and retail sales will help solidify the outlook for the month and quarter, she said. The central bank has forecast real annualised growth of 2.5 percent in the second quarter.
The economy grew at a lacklustre pace in the first quarter and jobs growth slowed markedly in May after two months of blockbuster gains. The near future doesn't look much stronger due to investor anxiety over Sunday's Greek elections and persisting worry over European sovereign and bank debt.
The setback in manufacturing was the third fall in four months, and came on the heels of a 1.9 percent rise in March. The median forecast in a Reuters survey of analysts was for a 0.3 percent rise. None forecast a decline of more than 0.6 percent.
Sales fell by C$410 million ($402 million) to C$49.1 billion; dragged down by the aerospace industry and oil and coal, while the auto industry rose.
The 9 percent rise in motor vehicle assembly sales was the ninth increase in 10 months.
New manufacturing orders fell 3.2 percent while unfilled orders remained unchanged, and the ratio of inventory to sales crept up to 1.32 from 1.30.
By volume, or constant dollars, sales fell 0.6 percent.
On household debt, the central bank also forecast on Thursday that the ratio would continue to grow over the medium term, even though the pace of debt accumulation was moderating.
The rise in the ratio occurred as Canadians' credit market debt grew faster than their personal disposable incomes over the quarter.
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