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Canadian Manufacturing Activity Down in December

Manufacturing sales declined for the third consecutive month, down 1.3 percent to $56.4 billion (US$42.4 billion) in December on lower sales of petroleum and coal products, according to new data from Statistics Canada.

Excluding this industry, manufacturing sales declined 0.3 percent. Sales fell in 12 of 21 industries, representing 72.7 percent of manufacturing sales. Manufacturing sales in volume terms were also down, declining 1.2 percent in December.

In the petroleum and coal product industry, sales declined for a second consecutive month, falling 10.4 percent to $5.2 billion (US$3.9 billion), with a decrease in volumes (-5.2 percent) accounting for about half the decline. 

Food manufacturing sales declined 2.3 percent to $8.6 billion (US$6.5 billion) in December, following two consecutive monthly increases. The decrease in December mainly reflected lower sales in the meat manufacturing, dairy manufacturing, and grain and oilseed manufacturing industries.

Partly offsetting these declines were increases in the primary metal (+3 percent), aerospace product and parts (+4.2 percent) and non-metallic mineral product (+6.1 percent) industries.

Inventory levels increased 0.3 percent to $84.8 billion (US$63.8 billion) in December. Inventories rose in 13 of 21 industries. Higher inventories in the primary metal (+2.1 percent), machinery (+2.1 percent) and fabricated metal product (+2.5 percent) industries contributed to the overall gain. This increase was partly offset by lower inventories in the petroleum and coal product (-7.6 percent) and transportation equipment (-1.4 percent) industries. The inventory-to-sales ratio increased from 1.48 in November to 1.50 in December.

Unfilled orders rose 0.6 percent in December to $97.3 billion (US$73.1 billion), a third consecutive monthly increase. The growth in unfilled orders was attributable to the aerospace product and parts (+0.5 percent), machinery (+2.2 percent) and fabricated metal product (+2.7 percent) industries.

The unadjusted capacity utilization rate for the manufacturing sector decreased from 79.4 percent in November to 75.9 percent in December. Declines were widespread and may reflect to some extent regular seasonal variations. The non-metallic mineral product as well as plastic and rubber products industries had the largest declines in December. 

The capacity utilization rate for the non-metallic mineral product industry declined for the fourth consecutive month, falling 12.1 percentage points to 56.7 percent in December. The decline was attributable to lower production in most non-metallic mineral product industries, particularly in the glass and glass product manufacturing and cement and concrete product manufacturing industries.

The capacity utilization rate of the plastic and rubber products industry fell 9.3 percentage points to 64.8 percent in December. The decrease reflected lower production of plastic and rubber products due to lower orders and seasonal shutdowns at some facilities.

From 2017 to 2018, sales in the Canadian manufacturing sector rose $34.9 billion (US$26.2 billion), or 5.4 percent, to $686.4 billion (US$516 billion). This was the third consecutive annual gain, following an increase of 6.1 percent in sales posted in 2017. 

In constant dollars, sales increased for the third consecutive year, rising 2.1 percent in 2018 to $630.6 billion (US$474 billion). As per the Industrial Product Price Index, average prices in the manufacturing sector rose 3.9 percent in 2018 compared with 2017. 

In seasonally adjusted current dollars, inventories increased 9.7 percent to $84.6 billion (US$63.6 billion) when comparing December 2018 with December 2017. Over the same period, unfilled orders rose 14.7 percent to $97.3 billion (US$73.1 billion).


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