Canadian manufacturing sales declined 0.8% to C$46B in May; sales have been relatively flat in 2011

OTTAWA , July 15, 2011 () – Manufacturing sales declined 0.8% (-$360 million) to $46.0 billion in May. Sales have remained relatively flat since January 2011.

Constant dollar manufacturing sales declined 0.8% in May.

The overall decrease in current dollar sales reflected a 2.4% decline on the non-durable goods side of manufacturing. The declines were mostly concentrated in the food, petroleum and coal product and chemical industries. In contrast, the durable goods industries rose 0.8% in May.

Lower sales were reported in 11 of 21 industries, representing 71.9% of total manufacturing.

Sales decline in the food industry

Sales in the food industry declined 3.1% in May to $6.9 billion. The decrease was partly attributable to lower sales in the dairy product industry.

Manufacturers in the petroleum and coal products industry also reported a decrease in sales, down 2.5% in May to $6.3 billion. The decline in petroleum stemmed from a combination of lower prices and reduced volumes as result of maintenance shutdowns.

Sales in the chemical industry fell 3.0% to $3.7 billion. The decline reflects lower than normal unadjusted sales in the pesticide, fertilizer and other agricultural chemical industry.

Partly offsetting these declines were gains in the primary metal (+3.7%), machinery (+3.9%) and computer and electronic product (+7.7%) industries. The increase in machinery was mostly attributable to greater activity in the mining and oil and gas field machinery industry.
Manufacturing sales down in six provinces

In May, Newfoundland and Labrador, Alberta and British Columbia had the largest declines in manufacturing sales.

Sales in Newfoundland and Labrador fell 40.4% to $299 million, the largest decrease in percentage terms since April 2009. The decline stemmed from lower sales in non-durable goods industries.

In Alberta, sales fell 2.9% to $5.7 billion. A 16.4% drop in the chemical industry was the largest factor in the decline. Petroleum and coal products (-2.3%), food (-3.4%) and fabricated metal products (-7.0%) also contributed to the decrease.

In British Columbia, sales were down 3.9% to $3.1 billion, with 13 of 21 industries posting declines compared with April. Paper (-10.1%) and wood product (-7.0%) manufacturers reported the largest decreases.

Sales in Saskatchewan rose 8.6% in May to $1.1 billion. The gains were largely attributable to increases reported by manufacturers in the non-durable goods industries. Higher sales in the chemical industry accounted for part of the advance.

In Ontario, sales advanced 0.4% to $20.6 billion, following a 1.8% drop in April. Sales in the primary metal, computer and electronic product and machinery industries led the gains.
Inventory levels up for the eighth straight month

Inventory levels increased 0.7% in May to $63.1 billion, their highest level since April 2009. The rise was led by a 4.0% gain in the chemical industry, reflecting higher goods-in-process inventories.

Increased levels of inventories were also reported by manufacturers in the primary metal (+2.2%), motor vehicle (+10.4%), machinery (+1.0%) and aerospace product and part (+1.3%) industries.

The inventory-to-sales ratio rose from 1.35 in April to 1.37 in May, bringing the ratio to its highest level since February 2010. The higher level reflects eight months of increases in inventory levels and declining sales in April and May.

Unfilled orders rise for the fifth consecutive month

Unfilled orders advanced 0.9% in May to $58.0 billion, the fifth consecutive monthly increase.

The rise in unfilled orders was largely driven by the aerospace product and parts industry (+2.4%). The increase in orders for the aerospace industry partly reflected the depreciation of the Canadian dollar in May. Excluding the aerospace industry, unfilled orders declined 0.4% to $31.4 billion.

These gains were partly offset by declines in the computer and electronic product (-2.6%) and fabricated metal product (-1.3%) industries.

New orders remained unchanged at $46.5 billion in May. An advance in the aerospace industry was offset by declines in a number of industries, including railroad rolling stock, food and fabricated metal product.

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