Canadian Manufacturing Sales Down 0.6 percent in October - Modern Distribution Management

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Canadian Manufacturing Sales Down 0.6 percent in October

Decline reflects lower production of aerospace, decreased primary metal sales.
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Canadian manufacturing sales declined 0.6 percent to C$52.7 billion (US$43.3 billion) in October, the second decrease in 2014. The drop reflected lower production of aerospace product and parts and a decrease in primary metal sales.

Notwithstanding the lower overall sales, manufacturers in 15 of 21 industries, representing more than 60 percent of total manufacturing, reported higher sales in October. Excluding the aerospace product and parts, and primary metals industries, sales in the manufacturing sector rose 0.4 percent.

Constant dollar sales fell 0.5 percent, indicating a lower volume of manufactured goods sold.

Production of aerospace products and parts fell 15.6 percent to $1.6 billion (US$1.4 billion) in October, following a 17.4 percent increase in September. Lower production was widespread in the industry. The decline was more indicative of strong production in September than weak production in October. In September, monthly production of aerospace product and parts reached its highest level since the current series began in 1992.

Sales were also lower in the primary metals industry, down 5.5 percent to $4.1 billion (US$3.5 billion). Despite the decline, sales in October were the second highest of any month in 2014, and 14.6 percent higher than October 2013. In September, sales of primary metals were at their highest level since October 2008.

A 1.8 percent increase in the sales of motor vehicles partly offset the decline. The rise was the third in four months for the motor vehicle industry. Sales in October were 9.1 percent higher than those in October a year earlier. Year-to-date motor vehicle sales were 4.9 percent higher than in the same period in 2013.

Manufacturing sales fell in six provinces, with Quebec and New Brunswick posting the largest declines.

Sales in Quebec decreased 3 percent, giving back part of the 6.7 percent increase recorded in September. Manufacturers of aerospace product and parts, and primary metals reported the largest declines. Notwithstanding the decrease, sales in October were 5.5 percent higher than in October 2013 and have surpassed the $12-billion mark in each of the last five months, a streak that was last observed in 2008.

In New Brunswick, manufacturing sales fell 11.7 percent to $1.3 billion (US$1.1 billion) – their lowest level since November 2010 – mainly as result of lower sales of non-durable goods. This was the third consecutive month of lower sales for the province, and the ninth decline in 12 months.

Lower sales in these provinces were partially offset by gains in Newfoundland and Labrador, where sales more than doubled as a result of a jump in the sale of non-durable goods. Manufactured goods sales in Newfoundland and Labrador tend to be volatile compared with other provinces.

In addition, sales in Alberta rose 1.3 percent to $6.8 billion (US$5.9 billion), the second consecutive increase. The rise was widespread as 14 of 21 industries posted higher sales, led by a 3.2 percent increase in the sale of food.

Inventories in the manufacturing sector rose 0.5 percent to $71.3 billion (US$61.3 billion) in October. Higher stocks in the transportation equipment, fabricated metal product, and machinery industries all contributed to the increase. Notably, goods-in-process inventories in the fabricated metal product industry rose 4.7 percent to their highest level in more than two years.

Unfilled orders grew for the second consecutive month in October, up 0.5 percent to $90.9 billion (US$78.1 billion), reflecting higher unfilled orders in the transportation equipment industry. In particular, unfilled orders in the aerospace product and parts industry rose 1.1 percent to $49.2 billion (US$42.3billion) in October. In 2014, increasing unfilled orders throughout the transportation sub-industries have pushed total unfilled orders in the manufacturing sector to their highest level since this series began in 1992.

The increase in October particularly reflected the impact that the declining value of the Canadian dollar had on the aerospace industry. Most of the unfilled orders in the aerospace industry are held in US dollars, and the declining value of the Canadian dollar increases the value of these orders.

New orders fell 1.9 percent to $53.2 billion (US$45.7 billion), as a result of a decline in the transportation equipment and primary metal industries.

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