MRO Magazine

Manufacturing sales creep up for sixth month in a row

Ottawa, ON -- In current dollars, Canadian manufacturers reported $52.5 billion in sales for June 2008, up 2.1% fro...


August 19, 2008
By MRO Magazine

Ottawa, ON — In current dollars, Canadian manufacturers reported $52.5 billion in sales for June 2008, up 2.1% from May and the fifth increase in six months, according to Statistics Canada’s latest monthly Survey of Manufacturing.

In constant dollars, manufacturing sales increased 0.6% to $47.0 billion in June. Industrial prices for petroleum and coal, chemical products, wood products, and motor vehicles rose notably during the month.


Increases were widespread as 14 of 21 manufacturing industries, representing 81% of total sales, reported gains.


The largest contribution to the gains in total manufacturing sales came from petroleum and coal product manufacturers. Sales increased by 6.4% in this industry, mirroring the 6.2% rise in prices observed for the month.

Sales by primary metal manufacturers also contributed significantly to the rise in June, gaining 6.1% compared with May. Primary metal sales have increased for eight consecutive months due to strong international demand.

Motor vehicle manufacturers posted their fourth gain in six months as sales rose 4.2% in June. Despite the recent strengthening, motor vehicle manufacturing sales only reached $4.2 billion, well below the $5.0 billion monthly average for 2007.

For a second consecutive month, nine provinces reported gains in sales. Only British Columbia posted a decrease in manufacturing, with a 2.1% drop in sales compared with May.

The Atlantic provinces were particularly strong, with manufacturing sales up 5.2% in June, led by strong sales of non-durable goods. The Prairie provinces also continued to report gains above the national average, with a 3.5% increase.

Quebec manufacturing sales rose 2.2% for a fifth consecutive monthly gain. Sales in Ontario rose by 1.7% as the transportation industry regained some strength compared with May.


Inventories rose at about half of May’s rate, increasing by 0.6% in June to $66.7 billion. Petroleum and coal product inventories accounted for about half of the increase in total manufacturing inventories, rising 4.9% due to higher prices.

Primary metal manufacturers reported a 2.6% increase in inventories to $7.3 billion, despite a drop in price. Primary metal manufacturers have reported rising inventory levels for four consecutive months. Even with this current run-up of inventories, levels were still lower than the $8.0 billion peak observed at the end of 2006.

The inventory-to-sales ratio dropped for a third consecutive month, decreasing to 1.27 after reaching a recent high of 1.34 in January 2008. June’s ratio was the lowest level since April 2007.

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.


Unfilled orders continued to increase at manufacturing plants in June. Manufacturers reported a 1.5% increase in unfilled orders in June, as the backlog advanced to $64.2 billion. Unfilled orders, which provide an indication of future sales particularly for durable goods industries, have failed to increase only four times in the past two years.

After remaining stable in April and May, aerospace product and parts manufacturers reported a sizeable increase in unfilled orders in June. The backlog of orders rose 2.2% or $663 million, roughly two-thirds of the total gains. Fabricated metal product manufacturers accounted for much of the remaining increase with a 3.2% rise in unfilled orders.

Computer and electronic products was one of the few industries to report a drop in unfilled orders, decreasing by 3.8%.

New orders increased for the third time in four months, reaching $53.4 billion. New orders have been improving gradually since December 2007 after a period of weakness throughout most of 2007.