The 2020 Mid-Year Economic Update_long

Canadian Manufacturing Sales Up 1% in November

Higher motor vehicle sales in Ontario led the increase.

Canadian manufacturing sales increased 1 percent to C$50.8 billion (US$34.8 billion) in November, led by higher motor vehicle sales in Ontario, according to Statistics Canada. These gains were partially offset by declines in sales of other transportation equipment, primary metals and petroleum and coal products.

In constant dollar terms, sales were up 1 percent, indicating that a higher volume of manufactured goods were sold.

Motor vehicle sales rose 3.8 percent in November, the sixth increase in seven months. Sales rose 18 percent compared to November 2014. The increases in motor vehicle sales were largely the result of increases in the value of the vehicles assembled in Canada. According to the Industrial Product Price Index, the price of motor vehicles rose 12.8 percent in the 12 months ending in November.

Motor vehicle parts manufacturers benefited from the increased activity in the motor vehicle assembly industry. Sales of motor vehicle parts rose 2.6 percent in November, the fourth gain in five months.

Production of aerospace products and parts rose 11.5 percent in November as widespread gains were reported in the industry. The gains reflected in part a rise in the value of the U.S. dollar relative to the Canadian dollar in the month. For the three months ending in November, aerospace production was 7.6 percent lower than in the three months ending in August.

Sales of miscellaneous manufactured goods rose 5.8 percent, following three months of lower sales. Year-to-date sales in the industry were up 7 percent while prices rose 2.3 percent year over year.

Electrical equipment, appliance and component manufacturers reported a 6.5 percent increase in sales – the highest level reported by the industry since February 2014. However, year-to-date sales were 1.6 percent lower year-over-year.

Partially offsetting the gains were lower sales in the other transportation equipment, primary metal and petroleum and coal product industries. Sales of other transportation equipment fell 18.8 percent, the third decline in four months. Month-over-month price declines were recorded by the Industrial Product Price Index for the primary metal (-2.1 percent) and petroleum and coal product (-0.5 percent) industries.

Sales in Ontario grew 1.5 percent, the second consecutive gain, as motor vehicle manufacturers increased the value of their output by shifting production to higher-end and/or redesigned models. Motor vehicle parts sales rose 2.7 percent.

Gains in Ontario were more widespread than the rest of the country, with higher sales reported in 18 of 21 industries, representing more than 90 percent of the sector in the province. Notably, sales of both primary metals and petroleum and coal products rose in Ontario, despite the fact that those industries posted two of the larger national declines in November.

Manufacturing sales in Ontario were 4.9 percent higher than in November 2014. On a year-to-date basis, sales in Ontario were 1.6 percent higher in 2015 compared with the same period in 2014. This largely reflected weaker auto sales at the beginning of the year, which were due to retooling at motor vehicle assembly plants.

Following four months of decline, sales in Quebec rose 1.2 percent in November, reflecting increased production of aerospace products and parts. Unlike Ontario, manufacturing in Quebec did not experienced sustained gains from January to November 2015. As such, year-to-date sales were 0.8 percent lower than for the same period in 2014, while sales in November 2015 were 0.9 percent lower than in November 2014.

Manitoba manufacturers reported a 4.9 percent increase in sales on the strength of a 42 percent gain in the machinery industry. Machinery sales tend to be more volatile than overall manufacturing sales in the province. Sales in Manitoba increased for the fifth time in seven months and were at their highest level since December 2014.

A 4.1 percent decrease in sales in New Brunswick partially offset the increases. Manufacturing sales in the province have recorded 6 declines in 11 months and were at their lowest level since October 2009.

Total manufacturing inventories remained at C$73.3 billion (US$50.2 billion) in November, as higher inventories of transportation equipment, and petroleum and coal products were offset by lower inventories of primary metals and machinery. In each of the 21 industries, inventory levels moved by less than 2 percent. Inventory levels were 3.1 percent higher than in November 2014.

The inventory-to-sales ratio fell from 1.46 in October to 1.44 in November. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders fell for the 9th time in 10 months, down 0.3 percent to C$93.3 billion (US$67 billion) in November. The decline reflected widespread decreases in orders in the fabricated metal product and railroad rolling stock industries.

New orders rose 3.5 percent as a result of an increase in the aerospace product and parts industry.

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