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Manufacturing finally sees a boost in sales

Ottawa, ON -- Manufacturing sales increased 1.9% to $39.7 billion in June 2009, partially reversing the 4.9% d...


Ottawa, ON — Manufacturing sales increased 1.9% to $39.7 billion in June 2009, partially reversing the 4.9% decline posted in May. Strong sales in the aerospace industry and a rise in the price of petroleum and coal products largely explain the increase. Excluding both industries, Canada’s manufacturing sales would have decreased 0.5%.

 

Constant dollar manufacturing sales rose 1.1% in June, indicating that greater sales volumes were responsible for more than half of the increase in sales.

 

Sales were up in 12 of 21 manufacturing industries in June, representing 68% of total sales.

 

Strength in the aerospace and petroleum industries partially offset by lower sales for motor vehicles

 

Production in the aerospace industry increased 61.0% to $1.6 billion, partially reversing a 44.5% decline in May. The aerospace industry has been extremely volatile over the past several months. Excluding the aerospace industry, total Canadian manufacturing sales increased 0.4%.

 

Sales in the petroleum and coal products industry rose 6.9%, reflecting higher prices for petroleum products. In addition, several refineries increased production in June.

 

Non-metallic mineral products (+5.6%), furniture and related products (+4.9%), wood products (+3.5%) and food (+1.4%) were other industries reporting sales increases in June.

 

The motor vehicle manufacturing industry was the main offsetting industry in June. Sales decreased 6.0%, following a 20.8% drop in May. The recent weakness reflected several plant shutdowns. In contrast, motor vehicle parts manufacturing edged down 0.1% in June.

 

Provincial manufacturing sales results are mixed

 

Among the Atlantic provinces, sales rose significantly in Newfoundland and Labrador (+58.0%) and New Brunswick (+7.2%), while Prince Edward Island (-13.2%) and Nova Scotia (-2.8%) saw sales decline.

 

In Quebec, sales increased 5.7% in June, partially reversing an 8.6% drop in May. The provincial advance was largely driven by aerospace production, which increased by 82.5% to $1.1 billion. Non-metallic mineral products (+8.5%), fabricated metal products (+4.4%), food (+2.1%) and petroleum and coal products (+2.0%) were other industries contributing to the sales increase in Quebec.

 

Sales in Ontario edged down 0.3% in June, largely the result of a 7.3% decline in motor vehicle manufacturing in the province. The primary metals industry (-5.9%) also contributed to the weakness in Ontario. A 2.6% gain in the food industry only partially offset the declines in motor vehicle manufacturing and the primary metals industry.

 

Inventories edge lower

 

Manufacturers reported a 0.1% decline in inventories compared to May, with levels falling to $62.7 billion. This was the fifth consecutive monthly decline.

 

Fabricated metal products manufacturers (-3.1%) and the primary metals industry (-2.0%) posted two of the larger declines in value terms. However, a 14.0% advance in the value of inventories in the petroleum and coal products industry, stemming from both price and volume increases, largely offset the declines in other industries.

 

The slight decrease in inventories and the increase in overall manufacturing sales caused the inventory-to-sales ratio to drop to 1.58 from 1.61. The inventory-to-sales ratio remains well above values seen in 2007 and 2008.

 

Unfilled orders increase in June

 

The backlog of unfilled orders rose 2.0% in June to $60.0 billion, partially offsetting the 7.0% decline in May.

 

In June, the aerospace products and parts industry reported a 3.0% increase in the value of unfilled orders. Excluding aerospace products and parts, unfilled orders increased 0.9%.

 

New orders increased 18.4% in June to $40.8 billion.

 

Data from the July 2009 Monthly Survey of Manufacturing will be released on September 16.