Canadian manufacturing sales fell 0.8% in October to C$48.7B after rising in each of three previous months; decline reflects lower sales in petroleum and coal product industry, aerospace product and parts industry

OTTAWA , December 14, 2011 () – Manufacturing sales fell 0.8% in October to $48.7 billion after rising in each of the three previous months. Despite the decline, October's sales were the second highest of any month in 2011, surpassed only by September. The decrease in October largely reflected lower sales in the petroleum and coal product, and the aerospace product and parts industries. These declines were partially offset by advances in the motor vehicle parts, computer and electronic product, and wood product industries.

Constant dollar manufacturing sales were down 0.9%, also the first decline after three months of advances.

Lower sales were reported in 13 of 21 industries, representing about two-thirds of Canadian manufacturing. The reduction in sales largely came from non-durable goods manufacturers, whose sales fell 1.8% in October. Sales of durable goods rose 0.2%.

Petroleum and coal products post largest decline

Sales of petroleum and coal products fell 4.3% to $7.3 billion in October after increasing for three consecutive months. Shutdowns related to maintenance work at several plants contributed to the decline. Nonetheless, sales in October were the second strongest for the industry in 2011.

Aerospace product and part manufacturers reported a 9.7% drop in production to $1.3 billion in October. The decrease followed two months of advances.

Sales declines also occurred in the food (-1.1%) and paper (-3.6%) industries.

Partially offsetting the declines was a 6.2% increase in the sale of motor vehicle parts. The computer and electronic product (+6.3%) and the wood product (+5.2%) industries also posted higher sales.
Manufacturing sales down in most provinces

In October, seven provinces posted lower sales, with the largest decreases in dollar terms occurring in Alberta, New Brunswick and British Columbia.

In Alberta, sales fell 4.2% to $6.0 billion. A 14.4% drop in the petroleum and coal products industry was the largest factor in the decline. Machinery (-2.8%) and paper manufacturing (-4.9%) also contributed to the decrease.

Sales in New Brunswick declined 5.4% to $1.8 billion, the largest decrease in both percentage and dollar terms since November 2010. The decline stemmed from lower sales in the non-durable goods industries.

In British Columbia, sales were down 1.2% to $3.2 billion, with 11 of 21 industries posting declines.

Sales in Nova Scotia rose 4.0% to $891 million in October, reflecting an increase in the non-durable goods industries.
Inventories continue to grow

Inventory levels advanced 1.4% in October following a 0.4% increase in September. This is the 13th consecutive month of growth in inventories for Canadian manufacturers.

Inventory levels were up in 13 of 21 industries, with non-durable goods manufacturers reporting a 2.2% increase and durable goods manufacturers reporting a 0.9% increase.

In the petroleum and coal product industry, total inventories rose 8.8% to $4.9 billion. The increase reflected a gain in raw materials (+11.7%), finished products (+6.2%) and goods-in-process (+9.7%) inventories.

In the food industry, inventories rose 3.9% to $6.2 billion, reflecting an increase in finished products and raw materials. A 1.7% advance in primary metals inventories also contributed to the overall rise in manufacturing inventories.

The inventory-to-sales ratio increased to 1.33 in October from 1.30 in September. This was the first increase in the ratio since June, and reflects the fact that inventories rose while sales declined. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders edge downwards

Unfilled orders edged down 0.3% in October to $61.6 billion, the first decline after nine months of advances. Declines in the aerospace product and parts industry (-4.3%) were partly offset by gains in the railroad rolling stock industry (+6.6%). The decrease in the aerospace product and parts industry largely reflected an increase in the value of the Canadian dollar relative to the American dollar. A substantial portion of unfilled orders in the industry are held in American dollars.

New orders decline

New orders fell 4.7% to $48.5 billion in October. An 11.7% decline in the transportation equipment industry reflected a decrease in unfilled orders in the aerospace product and parts industry. New orders of fabricated metal (-20.9%) and petroleum and coal products (-4.3%) were also down.

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