Canadian Manufacturing Sales Up 0.9% in August

Increase due to higher sales of food, primary metal, and petroleum and coal products.

Canadian manufacturing sales rose 0.9 percent to C$51.1 billion (US$39 billion) in August, according to Statistics Canada. The increase reflected higher sales of food, primary metal, and petroleum and coal products.

Sales were up in 15 of 21 industries, representing 69 percent of the total Canadian manufacturing sector. The increase reflected a higher volume of goods sold, as constant dollar sales rose 1.2 percent.

In the food industry, sales rose for the second consecutive month, up 1.7 percent to a record high.

Sales in the primary metal industry advanced 3.6 percent, the second consecutive monthly gain. The increase in August partly reflected higher sales of iron and steel mill and ferro-alloy, and non-ferrous metal products. The price of primary ferrous metal products rose 0.7 percent in August, according to the Industrial Product Price Index.

In the petroleum and coal products industry, sales rose 2.5 percent in August, the second consecutive monthly gain. The increase was attributable to higher volumes reported by most refineries, as prices for petroleum and coal products were down 1.2 percent in August, according to the Industrial Product Price Index.

In contrast, sales in the transportation equipment industry fell 1.1 percent. The decrease was mostly due to lower sales in the motor vehicle industry (-2.2 percent), which coincided with unusual one-week shutdowns in August at some Canadian automobile assembly plants (these shutdowns, which typically last two weeks, are more customary in July). Sales also declined in the fabricated metals industry (-1.9 percent).

The rise in manufacturing sales was widespread in August, with eight provinces recording increases. Ontario posted the largest sales gain in dollars terms, followed by Alberta and New Brunswick. The only provinces to record declines were Quebec and Newfoundland and Labrador.

Sales were up 0.8 percent in Ontario, reflecting gains in 17 of 21 industries. In the machinery industry, sales rose 5.9 percent, as several industry groups posted higher sales following decreases. Sales of food (+1.6 percent), beverage and tobacco products (+10.9 percent) and chemicals (+1.8 percent) also contributed to the provincial increase.

After a 2 percent decline in July, sales in Alberta were up 2.2 percent in August. The gain was partly the result of advances in the chemical (+4.2 percent) and food (+2.2 percent) industries. Despite the rise in August, manufacturing sales in Alberta were down 7.6 percent compared with August 2015.

In New Brunswick, sales rose 7.4 percent, as sales of durable goods increased 24.4 percent and sales of non-durable goods were up 3.9 percent.

After three gains in five months, manufacturing sales in Quebec fell 1.7 percent in August. The decline was mostly the result of lower production in the aerospace products and parts industry (-6.8 percent), and lower sales in the fabricated metal product (-7 percent) and chemical (-5.3 percent) industries.

Manufacturing inventory levels decreased 0.5 percent in August, following a 0.8 percent increase the previous month.

Inventories fell in 12 of 21 industries. The petroleum and coal product industry recorded the largest drop, with inventory levels down 5.9 percent, following two months of gains. Lower inventories in the food industry (-1.8 percent) also contributed to the overall decrease. These declines were partly offset by higher inventories in the transportation equipment industry (+1.1 percent).

The inventory-to-sales ratio declined from 1.41 in July to 1.39 in August. This 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 1.3 percent in August, a second consecutive monthly decline.

The decrease in August was the result of lower unfilled orders in the aerospace product and parts industry (-2.9 percent). The decline in the aerospace industry was partly due to the depreciation of the US dollar relative to the Canadian dollar during the month. Given that most unfilled orders in the industry are held in US dollars, fluctuations in the value of the Canadian dollar relative to the US dollar can influence trends in the industry. Excluding the aerospace industry, unfilled orders were up 0.7 percent in August.

The decrease in unfilled orders was partially offset by higher unfilled orders in the railroad rolling stock (+5.9 percent) and primary metal (+6.6 percent) industries.

New orders fell for the second consecutive month, down 0.9 percent in August as a result of declines in the aerospace product and parts, and computer and electronic products industries. The decrease in August was partially offset by higher new orders in the primary metal and railroad rolling stock industries.

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