Source: Statistics Canada
Manufacturers’ factory sales rose by a sharp 2.0% in April to $49.8 billion, following a weak March (-1.7%). Gains were led by the petroleum products industry but still were broadly based as 17 of the 21 manufacturing industries, representing 80% of total sales, reported increases.
Petroleum and coal products (+9.0%) dominated all industries in April, as manufacturing sales for this industry exceeded the $7.0 billion mark for the first time. Higher prices (+7.9%) and the return to more normal production levels, following the completion of scheduled maintenance by some refineries, were the key reasons for April’s showing.
Excluding petroleum from the mix, total manufacturing sales still climbed 1.0%.
Manufacturing Activity Up
Notable increases were also reported by the chemical products and machinery industries.
Manufacturing sales of chemical products advanced 3.8% to $4.1 billion in April, as a result of both higher prices (+2.3%) and the timing of shipments, some of which were delayed in March. The machinery industry posted a 5.7% rebound in sales as a number of large orders were shipped during the month.
Manufacturers’ sales of motor vehicles rose 1.8% to $4.1 billion. April’s increase followed a 5.9% drop in March. Sales by the industry have been quite volatile for several months, and have been on a downward trend for a year and a half. March’s decline was largely the result of a strike by a U.S. auto parts supplier that significantly affected the production of motor vehicles and parts in Canada.
Partly offsetting the overall rise in sales, the aerospace products and parts industry reported a 25.2% drop, which followed healthy gains in February (+13.4%) and March (+16.6%). The aerospace industry is inherently volatile and despite April’s decline, a record backlog of orders for aircraft and parts should contribute to some strong months ahead.
Volumes Grow
In volume terms, manufacturers’ sales improved by 1.3% to $47.2 billion in April, measured at 2002 prices. This marked the third increase in volumes in four months.
By province, healthy increases in sales of petroleum products contributed to improved manufacturing sales in Ontario (+1.4%), Alberta (+4.3%) and New Brunswick (+17.3%). In total, seven provinces reported higher sales.
Inventories Rise
Manufacturers’ inventories advanced 0.4% to $65.3 billion in April.
Some manufacturers attributed the buildup of inventories to short-term future shipments, while others stocked up in preparation for planned maintenance shutdowns.
By stage of fabrication, a 0.2% decrease in inventories of raw materials was counterbalanced by higher goods-in-process (+0.9%) and finished products (+0.7%) inventories.
April’s rebound in manufacturing sales was enough to pull down the inventory-to-sales ratio to 1.31 from March’s 1.33. The recent instability of the auto sector has contributed to the variable nature of the ratio over the last number of months.
The ratio had achieved a recent peak of 1.34 in January.
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.
Backlog Expands
The accumulation of unfilled orders continued in April, albeit at a slower pace. Following March’s aerospace-driven increase of 3.9%, total unfilled orders rose a more moderate 0.4% to $61.7 billion in April.
The backlog of orders has increased five times in six months, and stood almost 20% higher than one year ago. Increases in the machinery and primary metals industries were among the key movers.
Aerospace orders, which were up a strong 8.3% in March, remained little changed in April (-0.4%) at $29.9 billion. Increased demand for commercial aircraft, as well as defence-related products, has contributed to a considerable buildup in orders over the last couple of years.
New orders received in April were 2.0% lower at $50.1 billion, marking the third decrease in five months.
