The 2020 Mid-Year Economic Update_long

Canadian Manufacturing Sales Up 0.1% in May

Gain due to advances in aerospace product and parts as well as petroleum and coal products.

Canadian manufacturing sales edged up 0.1 percent to $49.9 billion in May, the second gain in 2015, according to Statistics Canada. Constant dollar sales fell 0.5 percent, indicating a lower volume of goods sold.

Sales were up in 6 out of 21 industries, representing almost half of the Canadian manufacturing sector.

Advances in aerospace product and parts as well as petroleum and coal products in May, were offset by multiple declines, most notably the chemical and machinery industries. Production in the aerospace product and parts industry rose 22.2 percent in May, after declining 18 percent in April. The aerospace industry is volatile relative to the manufacturing sector as a whole. The gain in May partly reflects changes in the value of the US dollar relative to the Canadian dollar, as sales and inventories are mainly reported in US dollars for the aerospace industry. Year to date, production has increased 7.4 percent compared with the same period in 2014.

Sales of petroleum and coal products rose 5.6 percent, mostly reflecting higher prices as reported by the Industrial Product Price Index. Prices fell from June 2014 to January 2015 for petroleum refineries, reaching a low in January. In May, prices were 14 percent higher than in January.

Lower sales in multiple industries offset the gains in aerospace and petroleum. Sales of chemical products fell 3.5 percent, reflecting in part a smaller seasonal increase than usual in the pesticides, fertilizers and other agricultural chemicals industry. Machinery manufacturers posted a 3.5 percent decline in sales and reported widespread decreases. Other industries posting lower sales included food and wood manufacturers.

Gains in Quebec were offset by declines in Ontario in May. The other provinces reported relatively minor fluctuations, with the largest dollar gain in Alberta.

Sales rose 2.2 percent in Quebec, the second gain for the province in 2015. Higher production in the aerospace industry (+49.1 percent) was responsible for the growth in May. Year to date, aerospace production was up 8.9 percent compared with the same period in 2014. Lower sales of machinery products (-16.7 percent) offset a portion of the gains in aerospace.

Manufacturers in Alberta posted a 0.9 percent increase in sales, mainly as a result of gains in petroleum and coal products. Sales for the manufacturing sector in Alberta have been generally trending downwards ever since prices for petroleum refineries began to decline in July 2014. Sales for petroleum and coal products rose 6.6 percent in May and reached their highest level since December 2014.

Declines in multiple industries led to a 1.1 percent decrease in sales for Ontario manufacturers, the fourth drop for the province in 2015. Manufacturers in the transportation equipment industry posted the largest dollar decrease in May, down 1.1 percent, following two months of advances. Despite the downturn in May, sales of transportation equipment were 5.2 percent higher on a year-to-date basis compared with the same period in 2014. The provincial decrease also reflected lower sales of chemical products, machinery and computer and electronic products.

The inventory-to-sales ratio edged down from 1.45 in April to 1.44 in May. The inventory-to-sales ratio measures the time, in months, that it would take to exhaust inventories if sales were to remain at the current rate.

The value of unfilled orders fell 1.3 percent in May, the fourth consecutive monthly decline. The transportation equipment industry (-1.2 percent), in particular the aerospace industry (-1 percent), contributed to the monthly decrease. Manufacturers in the fabricated metal and machinery industries also reported lower unfilled orders.

New orders rose 1.7 percent in May, as a result of growth in the aerospace product and parts industry. Gains in new orders for aerospace products partly reflected a stronger U.S. dollar relative to the Canadian dollar. The advances were partially offset by declines in computer and electronic products, chemicals and fabricated metals.

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