MRO Magazine

Manufacturing sales see largest increase in past 14 months

Ottawa, ON -- According to the latest Monthly Survey of Manufacturing from Statistics Canada, in 2002 prices, manuf...


July 18, 2008
By MRO Magazine


Ottawa, ON — According to the latest Monthly Survey of Manufacturing from Statistics Canada, in 2002 prices, manufacturing sales edged up 0.2% to $47.2 billion in May 2008.

Current dollar manufacturing sales rose 2.7% to $51.4 billion. This was the largest increase since March 2007 and the fourth increase in five months.

Sales increased for 16 of 21 industries, representing 94% of total manufacturing sales.

However, despite these gains, May’s sales remained below year earlier levels and well below the peak of $53.1 billion in March 2007.


Petroleum and coal products (+9.2%) accounted for almost half of the growth in manufacturing sales in May. Sales climbed to $7.7 billion, and have increased by almost 20% since March 2008. Rapidly rising prices accounted for most of this growth, as the price for petroleum and coal products increased by about 17% during the same period.

Primary metal manufacturers had another strong month, with sales rising 3.1% in May. Sales have increased within this industry for seven consecutive months, increasing by 13.3% since October 2007. Sales were up on a combination of price and volume, as exports for copper, iron, steel and aluminum products have grown significantly in recent months.

Manufacturing sales of chemical products were also strong in May, gaining 3.5% on the heels of 2.3% growth in April. Much of the increase in sales was attributable to fertilizer manufacturers, where prices have increased for 10 consecutive months.

The only notable decrease for the month was a 13.1% drop in sales by textile product mills. Textile and clothing manufacturers continued to struggle as they faced increased international competition, with sales falling by as much as 50% since 2003.


Provincially, manufacturers reported healthy sales gains in nine provinces. Only Prince Edward Island reported a decrease in May, with most of the weakness in the non-durable goods manufacturing sectors.

The Prairie provinces led the advance in May, with Saskatchewan up 8.6%, Alberta up 8.5%, and Manitoba increasing by 2.6%. Primary metal and chemical manufacturers supplied most of the sales gains in Saskatchewan and Manitoba. In Alberta, petroleum and coal product manufacturers, as well as machinery manufacturers (many of whom supply oil-field projects), drove sales higher.


Manufacturers reported a 1.3% increase in inventory levels in May, rising to $66.3 billion. In particular, inventories were up at primary metal, machinery, and petroleum and coal product manufacturers, mainly due to higher prices.

Inventories at manufacturing plants had generally been decreasing since the end of 2006. However, this trend has recently changed as levels began to rise at the start of 2008. Most of the recent increases were due to growth in goods in process and finished product inventories, which have advanced in six of the last seven months.

Although inventory levels rose in May, the much stronger increase in manufacturing sales helped to pull down the inventory-to-sales ratio for a second consecutive month. The ratio decreased two points to 1.29, the lowest level in six months.

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.


Manufacturers continued to backlog orders in May, as unfilled orders increased 0.8% to $62.6 billion almost $10 billion higher than one year ago. Unfilled orders have increased in 18 of the past 21 months, driven largely by the aerospace industry.

However, in May, much of the growth came from industries other than aerospace. Primary metal manufacturers saw unfilled orders increase a substantial 5.6% to $2.2 billion, as world-wide demand for metals such as steel and aluminum remained high.

In addition, the backlog for fabricated metal product manufacturers rose 1.9%. Unfilled orders within this industry have increased every month but one over the past year.

New orders advanced 2.7% in May to $51.9 billion. Overall, new orders were down slightly from a year ago.