The 2020 Mid-Year Economic Update_long

Canadian Manufacturing Sales Up 1.7% in November

Largest gains in Canada were in transportation equipment, primary metal and chemical industries.

Canadian manufacturing sales increased 1.7 percent in November to $49.9 billion, the highest level since May 2012. The largest gains were in the transportation equipment, primary metal and chemical industries, according to Statistics Canada.

Sales rose in 12 of 21 industries, representing about two-thirds of the manufacturing sector. Durable goods sales increased 2.7 percent to $25.5 billion while non-durable goods sales gained 0.8 percent to $24.4 billion.

Constant dollar sales rose 1.6 percent, indicating that most of the gain in manufactured goods sold was a result of higher volumes.

By Industry
The gain in the transportation equipment industry accounted for more than a third of the total increase in Canadian manufacturing sales. Sales in the industry were up 3.8 percent to $8.7 billion. The advance in transportation equipment partly reflected a 4.1 percent increase in the motor vehicle industry and a 6.5 percent rise in the aerospace product and parts industry.

In the primary metal industry, sales rose 5.9 percent to $4.0 billion, the highest level since April 2012. The gain was the largest since July 2011.

Sales in the chemical industry increased 3.9 percent to $4.1 billion. The advance partly reflected higher production at several plants following slowdowns for maintenance and repair work.

Miscellaneous manufacturing sales rose 11.9 percent to $961 million, the highest level since December 2011. This gain followed two months of declines.

By Province
Manufacturing sales were up in five provinces, led by Ontario.

Sales rose 3.8 percent to $23.0 billion in Ontario, reflecting advances in 14 of 21 industries. A 5.2 percent increase in the transportation equipment industry accounted for the largest portion of the provincial advance. Gains in the industry were reported by both motor vehicle and aerospace product and parts manufacturers. Sales also rose in the primary metal (+15.8 percent), and the petroleum and coal product (+7.0 percent) industries.

Sales in New Brunswick rose 11.7 percent to $1.8 billion, mostly reflecting an advance in the non-durable goods industries.

Manufacturing sales were down 1.8 percent in Alberta and 0.9 percent in Quebec. For Alberta, the decrease reflected a drop in petroleum and coal product sales (-6.7 percent) while in Quebec, lower non-durable goods sales were behind most of the decline.

Inventories declined 0.8 percent to $65.5 billion in November, largely reflecting drops in the petroleum and coal product, and computer and electronic product industries.

In the petroleum and coal product industry, total inventories were down 4.5 percent to $5.1 billion. The decrease was caused by lower inventories in all three stages of fabrication.

Inventories of computer and electronic products declined 6.9 percent to $2.8 billion. The inventory level in November was the lowest since August 2011.

The inventory-to-sales ratio decreased from 1.35 in October to 1.31 in November. The 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.

Long-Term Inventory Trend
From time to time, this release analyzes longer trends in Canadian manufacturing data. This month, the focus is on inventories. Despite the decrease in November, inventories have been on a gradual rise for the past two years. For the first 11 months of 2012, the monthly average value for total inventories was $65.2 billion, the highest level for this period since 2008. Each stage of fabrication (raw materials, goods-in-process, and finished products) posted higher levels in 2012.

Inventories of raw materials increased in both 2011 and 2012, reaching a monthly average of $26.0 billion for the January to November 2012 period. This level was $2.4 billion higher than the same period in 2010, when the monthly average value for raw material inventories had reached its most recent low.

The monthly average goods-in-process inventories posted the largest dollar increase of the three inventory categories in 2012. Compared with the same period in 2011, goods-in-process inventories rose $1.0 billion to a monthly average of $17.5 billion for the period January to November 2012.

Finished product inventories rose to a monthly average of $21.7 billion for the January to November 2012 period. This represents a 2.8 percent increase compared with the same period in 2011. Finished product inventory levels in 2012 were at their highest level since 2008.

The share of the three stages of fabrication relative to total inventories has evolved over the past decade. In 2012, raw materials accounted for 39.8 percent of total inventories, compared with 44.5 percent in 2004, their greatest proportion for the past 10 years. Although goods-in-process inventories continued to account for the smallest share of total inventories, the share has been on the rise since 2004. For 2012, goods-in-process inventories accounted for 26.9 percent of total inventories, the highest since 2002. Despite the increase in finished product inventories in 2012, their share of total inventories decreased to 33.3 percent, the lowest point since 2002.

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