Canadian Manufacturing Sales Fall 0.4% in June - Modern Distribution Management

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Canadian Manufacturing Sales Fall 0.4% in June

Petroleum and coal products sales dropped 10.6 percent.
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Canadian manufacturing sales fell 0.4 percent to $48.9 billion in June, reflecting a 10.6 percent drop in sales of petroleum and coal products, according to Statistics Canada. Excluding petroleum and coal products, sales rose 1.1 percent. In June, 12 of 21 industries reported sales increases, representing approximately 60 percent of Canadian manufacturing.

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Manufacturing sales have declined in four of the past six months.

Sales of non-durable goods fell 2.7 percent while durable goods sales increased 1.6 percent. Constant dollar sales increased 0.1 percent.

By Segment
Sales of petroleum and coal products fell 10.6 percent in June. A number of factors contributed to the decline, including a 4.9 percent drop in prices, ongoing shutdowns at a number of refineries as well as lower volumes at other refineries. This decline reflected an 18.1 percent drop in imports of crude petroleum used as raw materials by Canadian refineries, and a 2.9 percent decline in exports of petroleum and coal products in June.

Sales of petroleum and coal products have fallen 23.2 percent since the most recent high in March 2012 and are now at their lowest level since August 2010. Nonetheless, sales in the second quarter of 2012 were 2.7 percent higher than the same quarter of 2011.

Increased sales of machinery and transportation equipment were partially offset by the drop in petroleum and coal product sales.

Transportation equipment sales increased 1.7 percent to $9.2 billion, the highest level since November 2007. The gain reflected increases in all but one of the transportation sub-industries. Motor vehicle sales advanced 0.7 percent in June, the 11th increase in 12 months. Sales of motor vehicles were up 40.2 percent in June compared with June 2011, as the industry recovered from the supply chain disruptions related to the 2011 tsunami. Production in the aerospace product and parts industry rose 2.2 percent, while sales of motor vehicle parts advanced 1.1 percent.

Machinery manufacturers reported a 5.2 percent increase in sales, following two months of declines. The gain reflected higher sales in commercial and service industry machinery manufacturing.

By Province
Sales were down in six provinces in June, with the largest declines posted in Alberta and New Brunswick.

Sales in Alberta declined 2.6 percent to $6.0 billion — the third consecutive monthly decrease. Petroleum and coal products were the primary reason for the decrease, with sales dropping 19.3 percent in the industry. Excluding petroleum and coal products, sales in Alberta rose 2.8 percent. Machinery manufacturers reported a 9.8 percent increase in sales, the largest in the province. The advance in machinery was led by rising sales in agricultural, construction and mining machinery as well as other general-purpose machinery — industries that produce products used in oil and gas infrastructure projects.

In New Brunswick, sales fell 12.6 percent to $1.5 billion following a 9.5 percent gain in May. The decline was mainly attributable to the non-durable goods industries.

Higher sales in Ontario partially offset the overall declines. Sales advanced 0.5 percent to $22.6 billion, reflecting a 1.2 percent gain in the transportation equipment industry. Motor vehicle manufacturing sales rose 0.6 percent, the 11th increase in 12 months. Machinery manufacturing also contributed to the gain, up 4.9 percent to $1.4 billion.

Sales in Saskatchewan rose 8.0 percent to $1.2 billion, the largest gain since May 2011. This increase was led by the non-durable goods industries.

Inventory Levels
Inventories fell 1.7 percent in June to $64.8 billion, the first decrease in three months. Lower inventory levels of petroleum and coal products as well as aerospace product and parts were responsible for the overall decline.

Inventory levels in the petroleum and coal industry decreased 8.4 percent to $4.6 billion in June, following a 15.6 percent increase in May. The advance in May reflected accumulated stocks of raw materials and goods-in-process at refineries which were shutdown. In June, the decreases were widespread among the industry and were related to an easing of built up stocks at shutdown refineries as well as lower imports of crude petroleum products.

In the aerospace product and parts industry, inventory levels fell 6.3 percent to $4.5 billion as a result of lower goods-in-process and finished product. Also contributing to the decline were decreases in the computer and electronic products and machinery industries.

Inventory-to-sales Ratio
The inventory-to-sales ratio decreased to 1.32 in June from 1.34 in May. 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 rose 2.2 percent in June to $64.3 billion, reflecting an increase in aerospace product and parts. Excluding this industry, unfilled orders decreased 1.8 percent as producers of machinery and computer and electronic products reported fewer unfilled orders.

In the aerospace product and parts industry, unfilled orders increased 6.3 percent to $32.9 billion. This was the highest level of unfilled orders since April 2009.

Manufacturers in the machinery industry reported a 2.8 percent decline in unfilled orders in June, the first decrease in five months. Unfilled orders in the computer and electronic products industry fell to their lowest level since December 2004, down 6.4 percent.

New orders advanced 1.7 percent to $50.3 billion in June, largely as a result of an increase in aerospace product and parts. The increase was partly counterbalanced by the decline in petroleum and coal products.

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