MRO Magazine

Rapidity of decline in manufacturing sales slows

Ottawa, ON -- Manufacturing sales edged down 0.1% to $41.0 billion in April 2009, according to the latest Monthly...


June 16, 2009
By MRO Magazine


Ottawa, ON — Manufacturing sales edged down 0.1% to $41.0 billion in April 2009, according to the latest Monthly Survey of Manufacturing from Statistics Canada. Manufacturing sales levelled off between February and April, after falling by 18.7% between October 2008 and January 2009. Sizeable gains in the transportation equipment industry were offset by weakness in other industries. Excluding the transportation equipment industry, manufacturing sales decreased by 2.8%.


Constant dollar manufacturing sales gained 0.4% in April. The slight rise in constant dollar sales indicates an increase in the volume of sales between March and April.



Although manufacturing sales remaining largely unchanged in April, sales decreased in 16 of 21 manufacturing industries.


Weakness in many sectors offset by transportation gains


The weakness in most sectors was offset by a 16.4% gain in the transportation equipment industry. Production in the aerospace industry increased by $714 million in April, following a $626 million decline in March. Motor vehicle parts manufacturers also reported a 19.4% sales gain, reversing most of the 20.5% drop in March.


Petroleum and coal product manufacturing sales fell for the ninth time in 10 months, dropping 6.7% in April. A major plant shutdown, combined with reduced output at some locations as a result of low prices, was behind the decrease according to industry sources.


Primary metal manufacturers reported a 4.6% sales decrease in April, with plant shutdowns also playing a role in the decline. Sales have fallen by almost 48% in this industry since July 2008. Prices in the industry accounted for about one-third of the decrease over this period.


Fabricated metal products (-8.0%), miscellaneous manufacturers (-5.6%), and machinery manufacturers (-2.7%) were other industries with large sales declines in April.


Most provinces report declines


Sales fell in seven provinces during April. The Atlantic provinces, led by a sharp drop in Newfoundland and Labrador, reported a 7.9% decrease in sales. Most of the weakness in the Atlantic provinces was in non-durable goods industries such as petroleum and coal products and paper products.


Sales in Ontario slipped 0.6%, despite some gains in the motor vehicle industry. Primary metal sales for the province fell 15.3%, as a result of several plant closures and slowdowns. Petroleum and coal product sales also pulled down provincial results, declining 6.1% compared with March.


Sales in Quebec rebounded 4.7% in April, regaining much of the 6.7% drop reported in March. A 60.4% gain in the transportation equipment industry was partially offset by a 20.9% drop in machinery manufacturing sales during the month.


Inventories continue to move lower


Manufacturers reported a 0.9% decrease in inventories compared with March, with levels dropping to $64.8 billion. This was the fifth time in six months that inventory levels fell.


Inventory decreases were focused mainly in three industries: primary metals (-3.5%), fabricated metals (-2.6%) and chemical products (-1.8%). These declines were partially offset by a 3.4% rise in petroleum and coal inventories, which increased on a combination of higher volume and price.


The inventory-to-sales ratio decreased to 1.58 in April, down slightly from the 1.59 reported in March. The inventory-to-sales ratio has stopped rising in recent months, after increasing from 1.25 in July 2008 to 1.62 in January 2009.


Unfilled orders pull back


The backlog of unfilled orders fell 5.5% in April to $63.4 billion. This was the largest decrease in unfilled orders since January 2003. Unfilled orders for the most part had steadily increased between 2005 and 2008. However, recent months have partly reversed this trend, with unfilled orders falling in four of the past five months.


In April, the aerospace industry reported one of the sharpest drops in unfilled orders, falling by 8.3% or $3.1 billion. Excluding aerospace products and parts, unfilled orders decreased 2.0%.


New orders fell 10.8% in April to $37.3 billion. This was the lowest level recorded since August 1998.