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Manufacturing sales moved slightly lower in July

Ottawa, ON -- Manufacturing sales decreased 0.9% in July 2010 to $44.3 billion, Statistics Canada reports in i...


Ottawa, ON — Manufacturing sales decreased 0.9% in July 2010 to $44.3 billion, Statistics Canada reports in its latest Monthly Survey of Manufacturing. Despite the decrease, sales were 15.5% higher than their low reached in May 2009.

Constant dollar manufacturing sales declined 1.0% in July.

Sales fell in 12 of 21 industries, representing about half of total manufacturing sales.

Decreases in July were focused in three key industries, namely motor vehicles, paper products and furniture and related products.

Motor vehicle manufacturing sales fell 8.0% in July, reflecting larger-than-usual production declines at several plants during the month.

Paper product manufacturers reported a 5.5% decline in sales in July, the first decrease in five months. Several manufacturers reported a downturn in demand compared with June.

Manufacturing sales dropped 10.7% for furniture and related products in July, following a 5.8% gain in June. Most of the changes in June and July were focused in Ontario and British Columbia. About half of furniture and related product manufacturing takes place in these two provinces.

In July, nine industries reported gains, including a 3.2% rise in beverage and tobacco product manufacturing and a 1.2% increase in food sales.

PROVINCIAL RESULTS MIXED

Sales increased in five provinces in July. However, sizeable decreases in other provinces more than offset these gains.

Manufacturing sales fell 10.9% in Newfoundland and Labrador compared with June. The declines were mostly centred in the non-durable goods industries.

Sales in Saskatchewan fell for a third consecutive month, losing 3.8%. Durable goods industries were behind most of the decline in July.

Sales decreased 2.9% in both British Columbia and Quebec. Paper product manufacturers in the two provinces reported sizeable declines (-11.5% and -8.7% respectively). In Quebec, transportation equipment sales accounted for much of the decrease, falling 18.3% compared with June.

Manitoba posted the largest increase in July, up 1.7% on the strength of transportation equipment, food, and chemical product sales. Sales in Ontario were unchanged in July, while Alberta posted its first gain (+1.0%) in four months.

INVENTORY LEVELS RISE

Inventory levels rose 0.3% to $59.1 billion in July. In general, inventory levels have been declining since October 2008, although the downward trend has slowed since January 2010.

Most of the increase in July was centred in three industries, namely paper products (+2.7%), petroleum and coal products (+2.6%), and primary metals (+1.1%). These gains were largely offset by a 5.4% decrease in the inventory levels of aerospace product and parts manufacturers.

The inventory-to-sales ratio increased for a second month, reaching 1.33 in July. The ratio has stabilized in recent months, after rapidly declining between May 2009 and March 2010.

BACKLOG OF ORDERS FALLS IN JULY

Unfilled orders declined 1.1% to $53.7 billion in July. Despite the decrease in July, the backlog of orders at manufacturing plants across Canada has been gradually increasing since November 2009.

Aerospace product and parts manufacturers reported a 1.7% decline in unfilled orders compared with June, accounting for much of the decrease in July. Miscellaneous manufacturers (+17.6%) and machinery manufacturers (+1.4%) offset some of the drop. This represented the sixth increase in seven months for the machinery industry.

New orders fell 3.9% in July to $43.6 billion, mainly reflecting large declines in the transportation equipment industry. Excluding the transportation equipment industry, new orders edged down 0.3% compared with June.

Data from the August Monthly Survey of Manufacturing will be released on Oct. 14, 2010.