Canadian manufacturing shipments and orders came in weak for June, highlighting our growing susceptibility to the U.S. economic slowdown.

“In what is becoming a disconcerting trend in recent Canadian economic data, manufacturing shipments were considerably weaker than consensus estimates in June, dropping 1.9% from the prior month,” says BMO Nesbitt Burns.

The auto sector was weakest. But even apart from the autos, shipments were down 1.3%, and 16 of 21 industries reported declines. Shipments are now down 3.4% from year-ago levels, a move which BMO calls, “eerily similar to the drop in U.S. industrial production over that period.”

Orders were even weaker, plunging 3.7% in the month. They are now down 5.1% over the past year. Yet inventories were rising, suggesting further production cuts are necessary.

“On balance, this is yet another weak Canadian report in what is suddenly looking to be a trend. It also raises the chances of a considerable drop in tomorrow’s merchandise trade surplus (likely headed for the low $6-billion range after a $7.0 billion surplus in May),” says BMO Nesbitt Burns.

“While the Canadian economy is still a bit firmer than in the U.S., it looks as if GDP growth was just a shade above 1% in Q2 and probably won’t be much better in Q3.”