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Manufacturers continue to feel pinch of declining sales


Ottawa – Manufacturing sales declined 1.4% in November 2015 to $51.5 billion, reflecting lower sales of motor vehicles, chemicals, primary metals and food. This was the third decrease in four months. Year-to-date sales in 2014, however, were 5.2% higher than those in the first 11 months of 2013.

Sales declined in 16 of 21 industries, representing more than 80% of total Canadian manufacturing. Constant dollar sales fell 1.4%, indicating that a lower volume of manufactured goods was sold.

Motor vehicle and chemical sales decline

Sales of motor vehicles fell 5.9% in November to $4.6 billion, as a result of widespread decreases. The decline offset almost all of the gains that occurred in the previous two months. Sales were 10.0% lower than the two-year high reached in July 2014.

Chemical manufacturers reported a 3.6% decrease in sales in November. The declines reflected lower sales in all sub-industries of chemical manufacturing. This was the fourth consecutive monthly decline for sales of chemicals.

Sales in November were down 3.0% in the primary metal industry following a 5.4% drop in October. In both months, lower volumes were the primary cause of the sales decline. Despite the drop, sales in the industry remained at just over $4 billion in November. Monthly sales of primary metals have been over $4 billion since June 2014, when they reached that level for the first time in nearly three years.

The food manufacturing industry posted a 1.3% decrease in sales following three months of gains. Widespread reductions in sales were reported by food manufacturers.

Partially offsetting the declines was a 9.1% increase in the production of aerospace products and parts. Gains were widespread in the aerospace industry and were partly due to the decrease in the value of the Canadian dollar. As most inventories held by aerospace manufacturers are valued in US dollars, the decline in the value of the Canadian dollar increased the value of those inventories. Production in the industry is measured as the value of sales plus the change in the value of goods-in-process and finished product inventories held by manufacturers. As a result, the depreciation of the Canadian dollar directly contributed to the production increase in the aerospace industry.

Lower sales in Ontario and Quebec

Sales in Ontario fell 2.1% to $23.7 billion as 18 of 21 manufacturing industries, representing nearly 90% of the province’s manufacturing sector, posted lower sales. This was the third decline in four months. Sales of motor vehicles and chemicals were down 5.9% and 6.1% respectively. Ontario manufacturing sales in the first 11 months of 2014 were 5.8% higher than in the first 11 months of 2013.

Quebec manufacturers reported a 2.2% sales decrease in November, also the third decline in four months. The largest decreases in sales occurred in the petroleum and coal product and primary metals industries. Despite the decline, monthly sales of manufactured goods in Quebec have been over $12 billion in each of the past six months, a level that has not been sustained since the six-month period immediately preceding the 2008-2009 recession.

Sales in Alberta declined 3.8%, reflecting lower sales of petroleum and coal products. Sales in the province were at their lowest level since January 2014. The decline was largely due to a drop in prices in the petroleum and coal product industry.

Partially offsetting the declines was a 16.6% increase in sales in New Brunswick, which reflected gains in non-durable goods.

Inventories edge down

Manufacturers’ inventories edged down 0.1% in November following a 0.4% increase in October. A decline in primary metal industry inventories was partially offset by a rise in motor vehicle and food stocks.

The inventory-to-sales ratio rose to 1.38 in November from 1.36 in October. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders edge up

Unfilled orders edged up 0.2% in November to $91.1 billion, the fourth increase in five months. Unfilled orders in the machinery industry rose 1.7%, reflecting higher reported orders in two sub-industries: engine, turbine and power transmission equipment; and agricultural, construction and mining machinery. Unfilled orders in the machinery industry were at their highest level since July 2013. These increases were largely offset by a decline in unfilled orders in the fabricated metal product and transportation equipment industries.

New orders fell 1.7% in November as a result of a 6.2% drop in the transportation equipment industry.


Bill Roebuck

Bill Roebuck

Bill Roebuck is the Editor and Associate Publisher of Machinery & Equipment MRO magazine and mromagazine.com.
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