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Canadian Manufacturing Sales Fall 0.9% in July

Canadian manufacturing sales decreased 0.9 percent in July to $44.3 billion, according to Statistics Canada. Despite the decrease, sales were 15.5 percent higher than their low reached in May 2009. Constant dollar manufacturing sales declined 1.0 percent in July.

Sales fell in 12 of 21 industries, representing about half of total manufacturing sales.

By Industry
Decreases in July were focused in three key industries, namely motor vehicles, paper products and furniture and related products.

Motor vehicle manufacturing sales fell 8 percent in July, reflecting larger-than-usual production declines at several plants during the month.

Paper product manufacturers reported a 5.5 percent decline in sales in July, the first decrease in five months. Several manufacturers reported a downturn in demand compared with June.

Manufacturing sales dropped 10.7 percent for furniture and related products in July, following a 5.8 percent gain in June. Most of the changes in June and July were focused in Ontario and British Columbia. About half of furniture and related product manufacturing takes place in these two provinces.

In July, nine industries reported gains, including a 3.2 percent rise in beverage and tobacco product manufacturing and a 1.2 percent increase in food sales.

By Province
Sales increased in five provinces in July. However, sizeable decreases in other provinces more than offset these gains. Manufacturing sales fell 10.9 percent in Newfoundland and Labrador compared with June. The declines were mostly centred in the non-durable goods industries.

Sales in Saskatchewan fell for a third consecutive month, losing 3.8 percent. Durable goods industries were behind most of the decline in July.

Sales decreased 2.9 percent in both British Columbia and Quebec. Paper product manufacturers in the two provinces reported sizeable declines (-11.5 percent and -8.7 percent respectively). In Quebec, transportation equipment sales accounted for much of the decrease, falling 18.3 percent compared with June.

Manitoba posted the largest increase in July, up 1.7 percent on the strength of transportation equipment, food, and chemical product sales. Sales in Ontario were unchanged in July, while Alberta posted its first gain (+1.0 percent) in four months.

Inventory Levels
Inventory levels rose 0.3 percent to $59.1 billion in July. In general, inventory levels have been declining since October 2008, although the downward trend has slowed since January 2010.

Most of the increase in July was centred in three industries, namely paper products (+2.7 percent), petroleum and coal products (+2.6 percent), and primary metals (+1.1 percent). These gains were largely offset by a 5.4 percent decrease in the inventory levels of aerospace product and parts manufacturers.

The inventory-to-sales ratio increased for a second month, reaching 1.33 in July. The ratio has stabilized in recent months, after rapidly declining between May 2009 and March 2010.

Backlog of Orders
Unfilled orders declined 1.1 percent to $53.7 billion in July. Despite the decrease in July, the backlog of orders at manufacturing plants across Canada has been gradually increasing since November 2009.

Aerospace product and parts manufacturers reported a 1.7 percent decline in unfilled orders compared with June, accounting for much of the decrease in July. Miscellaneous manufacturers (+17.6 percent) and machinery manufacturers (+1.4 percent) offset some of the drop. This represented the sixth increase in seven months for the machinery industry.

New orders fell 3.9 percent in July to $43.6 billion, mainly reflecting large declines in the transportation equipment industry. Excluding the transportation equipment industry, new orders edged down 0.3 percent compared with June.

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