MRO Magazine

Manufacturing’s November decline in Ontario offsets gains in other provinces

Ottawa, ON -- Manufacturing sales declined 0.8% in November to $44.9 billion, led by decreases in the motor vehicle and motor vehicle parts industries, according to the latest Monthly Survey of Manufacturing from Statistics Canada. Excluding...


Ottawa, ON — Manufacturing sales declined 0.8% in November to $44.9 billion, led by decreases in the motor vehicle and motor vehicle parts industries, according to the latest Monthly Survey of Manufacturing from Statistics Canada. Excluding the motor vehicle industries, manufacturing sales edged up 0.2% in November compared with October.

Constant dollar manufacturing sales fell 1.4% in November. Constant dollar sales have been relatively stable over the past six months.

Higher sales were reported in 12 of 21 industries, representing 55.2% of total manufacturing.

MOTOR VEHICLE INDUSTRIES BEHIND THE DECREASE

Sales in the transportation equipment industry fell 7.0% in November, led by declines in motor vehicle (-9.2%) and motor vehicle parts (-6.5%) manufacturing. Extended plant shutdowns due to retooling, as well as shift reductions, were key contributors to the lower sales in November.

Primary metal sales also declined, down 1.9% in November. Despite this decrease, primary metal sales have been strengthening throughout most of 2010. In November, sales were 22.9% higher compared with the same month a year earlier.

Outside of the transportation and primary metal industries, many manufacturers reported gains compared with October. Computer and electronic product sales led the gains, rising 5.1% in November. Food manufacturing (+0.7%), as well as beverage and tobacco product sales (+2.9%), rose for the first time in four months.

Petroleum and coal product sales advanced 1.0% in November, the fifth consecutive increase. Rising prices rather than increasing volumes have been behind much of the recent gains.

ONTARIO DOWN, OFFSETTING GAINS IN MOST PROVINCES

In November, seven provinces reported sales gains. However, these advances were more than offset by declines in New Brunswick, Alberta, and in particular, Ontario. Excluding Ontario, manufacturing sales rose 0.6% in November compared with October.

Sales in Ontario decreased 2.3% in November. The transportation equipment industry was behind most of the drop, with sales falling 7.5% or by $420 million. Primary metal sales also fell in Ontario, losing 7.7% or $115 million.

New Brunswick (-4.9%) and Alberta (-1.6%) also reported lower sales. Non-durable goods industries such as food, and petroleum and coal products were behind much of the decline in both provinces.

Manitoba led the provincial sales advances in November, increasing 7.6% following a 6.1% drop in October. Sales in the transportation equipment and primary metal industries were key contributors to the increase.

Sales in Quebec edged up 0.2% in November, despite a 13.4% drop in the transportation equipment industry. Gains by computers and electronics (+18.5%), non-metallic minerals (+7.8%), and petroleum and coal (+7.2%) manufacturers helped to offset the drop in transportation equipment sales.

INVENTORY LEVELS ON THE RISE

Inventory levels increased 1.3% in November to $61.1 billion. Inventories have been on the rise since May 2010. In 2009, inventories were reduced, with most of the decrease coming in the first half of the year.

The rise in November reflected a 10.8% increase in the petroleum and coal product industry, mainly as a result of large deliveries of raw materials during the month. Both price and volume increases were factors in the advance.

Primary metal inventories rose 2.4% during the month. Inventories in this industry have risen for eight consecutive months.

These increases were partially offset by a 1.4% decline in the chemical products industry. Most of this inventory decline was focused in the pharmaceutical industry.

The inventory-to-sales ratio for November increased three points to 1.36. This was the highest level since February 2010. 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 ADVANCE

Unfilled orders advanced 0.5% to $52.7 billion in November, the first increase in three months. Unfilled orders have remained relatively stable in 2010 after declining throughout most of 2009.

The increase in orders was mostly concentrated in the fabricated metal and primary metal industries. The backlog of orders in these industries rose 5.2% and 15.5% respectively.

The largest decrease in unfilled orders came in the transportation equipment industry, which was down 0.7% in November compared with October.

New orders advanced 1.6% in November compared with October, the third increase in four months. New orders rose largely on the strength of the aerospace products and parts industry. Excluding aerospace products and parts, new orders fell 1.4% in November.

Data from the December Monthly Survey of Manufacturing will be released on February 16, 2011.