The 2020 Mid-Year Economic Update_long

Canadian Manufacturing Sales Down 0.9% in January

Quebec reported the largest sales decline in dollar terms.

Canadian manufacturing sales declined 0.9 percent to C$49.6 billion (US$50 billion) in January, the second decrease in seven months, according to Statistics Canada. The decrease partly reflected a drop in production in the aerospace product and parts industry. Lower sales in the primary metals, machinery and other transportation equipment industries also contributed to the overall decline. Excluding the aerospace industry, sales were virtually unchanged from December.

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Sales decreased in 11 of 21 industries representing approximately 44 percent of Canadian manufacturing. Sales of durable goods fell 2.4 percent while those of non-durable goods rose 0.6 percent.

Constant dollar manufacturing sales fell 1.1 percent in January, reflecting a decrease in the volume of manufactured goods. This was the first decline in constant dollar sales in three months.

Production in the aerospace product and parts industry dropped 34 percent to C$913 million (US$920.9 million) in January, the third decrease in four months.

Manufacturing sales in the primary metal industry were down 3.5 percent to C$4.1 billion (US$4.1 billion), despite a 1.8 percent rise in prices as indicated by the Industrial Product Price Index. The declines were concentrated in alumina and aluminum production and processing as well as non-ferrous metal production and processing. Notwithstanding the decline, sales were 4.9 percent higher than in January 2011.

In January, machinery manufacturers reported a 4.5 percent decline in sales to C$3 billion (US$3 billion), the second consecutive decline. Lower sales were widespread in the industry. Sales in January were at their third-highest level since the series began.

Higher sales in the motor vehicle (assembly) and motor vehicle parts industries offset a portion of the overall decline in manufacturing in January.

Sales in the motor vehicle (assembly) industry rose 2.6 percent to C$4.5 billion (US$4.5 billion), the seventh consecutive month of sales increases. Sales in the industry have grown 37.4 percent since June 2011, the most recent low. In January 2012, sales in the industry were at their highest level since November 2007.

Similarly, sales in the motor vehicle parts industry advanced 6.2 percent in January to C$2.1 billion (US$2.1 billion), the fifth consecutive monthly increase. Most motor vehicle parts manufacturers reported higher sales.

During the three month period following the March 2011 Japanese tsunami, Canadian motor vehicle (assembly) sales fell 11.6 percent to their June 2011 low of C$3.3 billion (US$3.3 billion). For the same period, motor vehicle (assembly) sales in the United States decreased 3.4 percent. Since June 2011, sales in the Canadian industry have advanced 37.4 percent, a stronger gain than was recorded for the US industry (+6.4 percent).

Sales in the combined motor vehicle parts and motor vehicle body and trailer industries in Canada and the United Sales also declined in the months following the tsunami. Combined sales in Canada for the two industries decreased 3.8 percent from March to a low of C$1.8 billion (US$1.8 billion) in May 2011. Since then, combined sales have gained 33.6 percent to C$2.4 billion (US$2.4 billion) in January 2012. Total sales for the equivalent industries in the US rose 4 percent over the same period.

By Province
Sales declined in five provinces in January, with Quebec posting the largest decrease in dollar terms.

Sales in Quebec declined 3.9 percent to C$11.6 billion (US$11.7 billion), the first decrease following four months of gains. A 37.3 percent drop in production in the aerospace product and parts industry was largely responsible for the provincial decrease. Lower sales in the plastics and rubber products (-15.3 percent) and machinery (-10.9 percent) industries also contributed to the overall decline. The decreases were partly offset by a 6.2 percent gain in the petroleum and coal products industry.

In New Brunswick, sales decreased 5.1 percent to C$1.5 billion (US$1.5 billion), the fourth consecutive monthly decline. A decline in non-durable goods sales was responsible for most of the provincial decrease.

Ontario's manufacturing sales edged down 0.3 percent to C$22.9 billion (US$23.1 billion), with 9 of 21 industries posting lower sales. Sales were down 8.8 percent in the primary metal industry. Sales declines also occurred in the machinery (-6.4 percent) and petroleum and coal products industries (-4.5 percent). Gains in the food (+4.3 percent), motor vehicle (assembly) (+3.3 percent) and motor vehicle parts (+5.8 percent) industries offset most of the decreases.

In Nova Scotia, a 7.6 percent advance in sales partly reflected gains in the non-durable goods industries. A 2 percent gain in British Columbia largely stemmed from higher sales in the primary metals (+12.5 percent) and wood products (+5.3 percent) industries. Sales in Alberta rose 0.9 percent, reflecting increases in 16 of 21 industries; lower sales in the food industry offset a portion of the gains.

Inventories rose 1.1 percent in January to C$65.3 billion (US$65.9 billion), the 15th gain in 16 months. Inventories were up in 19 of 21 industries.

Inventory levels in the transportation equipment industry increased 2.9 percent, largely reflecting a 5.6 percent gain in the aerospace product and parts industry.

In the primary metal industry, inventories increased 1.9 percent. Higher levels of raw material and finished product inventories were responsible for the overall increase.

Computer and electronic product inventories advanced 4 percent, largely reflecting a rise in raw materials on hand (+5 percent).

A 4 percent decline in inventories of petroleum and coal products offset a portion of the gains. The decrease in the industry stemmed from an 8.8 percent decline in raw material inventories and a 5.9 percent decline of goods-in-process.

The inventory-to-sales ratio advanced to 1.32 in January from 1.29 in December. The inventory-to-sales ratio is a measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled Orders
Unfilled orders edged down 0.2 percent to C$60.6 billion (US$61.1 billion). Since September 2011, unfilled orders have been relatively stable.

In January, a decrease in the aerospace product and parts industry was mostly responsible for the decline. Excluding the aerospace product and parts industry, unfilled orders rose 0.6 percent. In the aerospace product and parts industry, unfilled orders declined 1 percent to C$28.9 billion (US$29.1 billion). The decline reflected a higher value for the Canadian dollar relative to the American dollar in January, as a large portion of unfilled orders in the aerospace industry are held in US dollars.

Gains in unfilled orders were led by the computer and electronic products industry and the electrical equipment, appliance and component industry.

New Orders
New orders increased 0.8 percent in January to C$49.5 billion (US$49.9 billion), reflecting gains in 13 industries. A drop in the aerospace product and parts industry offset most of the gains.

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