MRO Magazine

Manufacturing sales at lowest level in almost 10 years

Ottawa, ON -- Manufacturing sales decreased for a fourth consecutive month in November 2008, says Statistics Canada...


Manufacturing

January 21, 2009
By MRO Magazine


Industries

Ottawa, ON — Manufacturing sales decreased for a fourth consecutive month in November 2008, says Statistics Canada in its latest Monthly Survey of Manufacturing. Sales fell 6.4% to $48.4 billion, the lowest level since December 2004.

 

Constant dollar manufacturing sales, which are measured in 2002 prices, fell to their lowest level in almost 10 years, decreasing by 3.0% in November. Therefore, about half of the drop in the current dollar series compared with October reflected price declines. The most significant price decreases were in the petroleum and coal industry (-18.5%) and primary metal industry (-6.0%).

 

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At the industry level, sales in 12 of 21 manufacturing industries decreased in November, accounting for over four-fifths of total sales.

 

The five largest manufacturing industries in Canada report decreases

 

November sales were down in the five largest industries, led by a 20.6% drop by petroleum and coal product manufacturers. Petroleum and coal product sales have fallen for five consecutive months. Sales have decreased by almost $3 billion compared with the peak of $8.2 billion reached in June 2008. Falling prices were the most significant factor in explaining the lower value of sales in November.

 

Primary metal manufacturers also reported significantly lower sales, down 17.4% to $4.1 billion. Sales in November were at the lowest level since March 2006, as both falling prices and deteriorating global demand negatively influenced the value of sales.

 

Sales in the transportation equipment industry decreased 3.9% in November. Aerospace products and parts production pulled back 22.5%, after a 27.2% gain in October. This was the first production decrease in the aerospace industry since August.

 

In November, chemical product manufacturers posted an 8.7% drop in sales, which was largely due to the resin, synthetic rubber, and artificial and synthetic fibres and filaments industry.

 

Sales decline in all provinces

 

Every province reported decreased manufacturing sales in November, ranging from a 0.3% decline in Saskatchewan to a 31.5% drop in New Brunswick. In the Atlantic provinces as a whole, manufacturing sales were down 21.7%, reflecting a sizeable decline in petroleum product prices.

 

Manufacturing sales fell by 7.6% in Quebec, erasing the 3.6% rise in October. The drop in sales for November was mainly due to declines in the primary metal and aerospace manufacturing industries.

 

Ontario’s manufacturing sales declined 3.9%, the fourth consecutive monthly decrease. Petroleum and coal product sales fell by 20.1%, reflecting the drop in petroleum prices. Primary metal manufacturing for the province declined by 16.2% compared with October.

 

The decline in Alberta’s manufacturing sales steepened in November. Sales fell 8.8%, following a 6.2% drop in October. The chemical product industry (-31.7%) was the leading cause of decreased provincial sales. In addition, petroleum and coal products sales fell by 15.2%.

 

Sales in British Columbia decreased by 3.6%, primarily due to declines in the wood and paper product industries.

 

Inventory levels move downward

 

Inventory levels pulled back 0.6% in November to $68.3 billion, the second decrease in nine months.

 

Petroleum and coal product inventories declined 9.8%, and primary metal manufacturers reported a 2.7% drop. Price decreases were a significant factor in the lower value of inventory in both cases. Offsetting these declines were increases of 4.6% in computers and electronics and 2.5% in aerospace products and parts.

 

The inventory-to-sales ratio increased to 1.41 in November, the highest level since January 2002. This eight-point jump was the largest month-to-month gain since June 1998, moving the ratio well above its three-year average of 1.30. 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 rose 0.8% in November for the sixth gain in seven months. Aerospace products and parts increased 2.7% after a 14.1% gain in October. Fabricated metal products partially offset this advance with a decline of 3.8%, the second decrease in three months. Excluding the aerospace industry, unfilled orders decreased 1.4% in November.

 

For the first time since April 2008, new orders fell below $50 billion, dropping 12.9% in November to $49.0 billion. The aerospace industry accounted for half of this decline, with new orders down $4.1 billion.