MRO Magazine

Manufacturing sales in March down 25% from 2008 peak

Ottawa, ON -- Manufacturing sales decreased 2.7% to $41.4 billion in March 2009, reversing February's gain. With th...


Manufacturing

May 15, 2009
By MRO Magazine


Industries

Ottawa, ON — Manufacturing sales decreased 2.7% to $41.4 billion in March 2009, reversing February’s gain. With this decrease, manufacturing sales have fallen almost 25% from their peak reached in July 2008, with most of the drop occurring between November 2008 and January 2009. Durable goods industries such as aerospace parts and products, motor vehicle parts, and primary metal products were behind most of the losses in March. These results are from Statistics Canada’s latest Monthly Survey of Manufacturing, released today.

 

Much of the decline in manufacturing sales was focused in Quebec, which accounted for slightly over half of the national decrease.

 

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Constant dollar manufacturing sales decreased 2.4% in March to $38.2 billion, indicating that most of the decline was due to a drop in the volume of sales.

 

At the industry level, sales in 15 of 21 manufacturing industries decreased in March, accounting for about three-quarters of total sales.

 

Durable goods industries report decreases

 

Durable goods industries reported the strongest decreases in March, down 4.4% from February and the fourth decrease in five months. Aerospace products and parts production pulled down results, falling 32.4% compared with February. A number of cancelled orders prior to March may have factored into the decrease.

 

Motor vehicle parts sales decreased 17.6% in March, as manufacturers in this industry continued to struggle with the rapidly changing needs of motor vehicle plants.

 

However, the drop in the motor vehicle parts industry was offset by a 22.2% gain in motor vehicle sales, which followed sizeable gains in February. Despite these recent gains, sales by motor vehicle manufacturers remain about 50% below levels from a year and a half ago.

 

Primary metal manufacturers reported a 7.6% decrease in March. Other than a gain in February, sales in this industry have been sliding downward since last fall. Primary metal manufacturing sales have fallen by about 40% since October 2008.

 

Non-durable good sales decreased 0.9% in March. Some continued weakness in the petroleum and coal product (-2.1%) and chemical industries (-1.5%), was partially offset by small gains in the food and beverage and tobacco product industries.

 

Quebec sales fall

 

Sales in Quebec fell by 6.1% to $10.5 billion, reaching their lowest level since June 2003. Sales in Quebec have been falling since October 2008. A 29.0% decline in aerospace products and parts manufacturing, as well as in primary metals (-9.3%) were behind much of the decrease in March.

 

In Alberta, manufacturing sales dropped 5.0% to $4.7 billion. A 23.1% decline in the machinery manufacturing industry, stemming from weakening demand for oil and gas field machinery, was a major cause of the provincial decline.

 

Sales in Ontario decreased 1.5% to $18.9 billion, following a 7.2% gain in February. The main contributors to March’s decline were petroleum and coal products (-9.6%), primary metals (-8.1%) and machinery manufacturing (-5.8%).

 

Manufacturing sales increased 1.0% in the Atlantic provinces. A rise in sales in the petroleum and coal products industry was largely responsible for the increase.

 

Inventories decrease in March

 

Inventory levels decreased 1.7% in March to $65.4 billion, the fourth decline in five months. A 2.5% reduction in durable goods inventories was behind most of the decreases. Raw materials (-1.8%), goods in process (-3.0%) and finished product inventories (-0.7%) all declined in March.

 

From an industry perspective, 17 of 21 industries reported lower inventories.

 

The inventory-to-sales ratio increased from 1.56 in February to 1.58 in March. The inventory-to-sales ratio remained well above its three-year average of 1.33.

 

Unfilled orders advance on aerospace orders

 

The backlog of unfilled orders increased 1.5% to $67.8 billion in March. Unfilled orders steadily increased from the summer of 2006 to the fall of 2008 before levelling off in recent months.

 

The aerospace industry reported a 2.6% increase in unfilled orders in March. Excluding the aerospace products and parts industry, unfilled orders remained virtually unchanged (+0.1%) in March. The only other industry reporting a notable gain was machinery, with unfilled orders up 4.3%.

 

New orders edged down 0.4% to $42.4 billion in March, following a 9.3% gain in February.

 

Data from the April Monthly Survey of Manufacturing will be released on June 15, 2009.