Canada: Monthly Survey of Manufacturing, December 2016

Manufacturing sales increased for the second consecutive month, up 2.3% to $53.5 billion in December, following a revised increase of 2.3% in November. The growth was mainly the result of higher sales of transportation equipment, as well as petroleum and coal products.

Overall, sales were up in 8 of 21 industries, representing 41% of the manufacturing sector. Sales of durable goods rose 2.4%, while sales of non-durable goods increased 2.1%.

In constant dollars, sales were up 2.3%, indicating that higher volumes of manufactured goods were sold in December.

The transportation equipment and the petroleum and coal products industries post the largest gains

Sales of transportation equipment rose 7.4% to $11.2 billion in December, following two consecutive monthly decreases. Much of the increase in December was attributable to a sharp gain in sales of other transportation equipment, which totalled $489 million, and to higher sales in the motor vehicle parts (+7.1%) and motor vehicle assembly (+2.8%) industries. Growth in the motor vehicle parts and motor vehicle assembly industries partly reflected higher sales in the domestic market. The increase in the transportation equipment industry accounted for 65% of the total gain in manufacturing sales.

Sales in the petroleum and coal products industry were up 11.6% to $5.2 billion, their highest level since July 2015. Growth in December was largely attributable to higher volumes at a number of refineries that resumed production following maintenance and retooling work in September and October. Petroleum product prices increased 5.4% in December, according to the Industrial Product Price Index.

Sales fell in 13 industries in December, with computer and electronic products manufacturing recording the sharpest decline, down 5.0% to $1.1 billion.

Ontario and Quebec lead sales increases

Sales grew in six provinces in December, but growth was concentrated in Ontario and Quebec.

Sales were up 2.3% in Ontario to $25.6 billion in December, the second monthly gain in a row. Growth in December was mainly attributable to a 5.9% rise in sales in the transportation equipment industry. Higher sales were also recorded in the petroleum and coal products, food and fabricated metal products industries. These increases were partially offset by lower sales in the computer and electronic products industry (-7.3%) and primary metals industry (-3.3%).

In Quebec, sales rose 4.1% to $12.8 billion in December, their highest level since July 2008. Sales increased 22.1% in the transportation equipment industry, accounting for more than half of the growth in the province. The petroleum and coal products industry and primary metals industry also recorded gains. These increases were partially offset by a 2.0% decline in the food industry.

Sales in Manitoba fell 4.5% to $1.5 billion in December, following two consecutive monthly gains. The decline was mainly attributable to lower sales of durable goods.

Inventory levels fall

Inventories were down 0.3% to $69.6 billion in December, the third consecutive monthly decrease.

Inventories fell in 11 of the 21 industries. The aerospace products and parts industry (-4.4%) and the motor vehicles industry (-8.5%) recorded the sharpest declines. These decreases were partially offset by a 9.2% increase in petroleum and coal product inventories.

The inventory-to-sales ratio declined from 1.34 in November to 1.30 in December. 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 decline

Unfilled orders fell 1.9% to $87.7 billion in December, the second consecutive monthly decline. The decrease in December was mainly due to a drop in unfilled orders in the aerospace products and parts industry, as well as the computer and electronic products industry.

These declines were partially offset by an increase in unfilled orders in the machinery industry.

New orders were down 0.6% to $51.8 billion in December, following three consecutive monthly gains. There was a decline in new orders in the aerospace products and parts industry, as well as the computer and electronic products industry.

Historical perspective on the Canadian manufacturing sector

As 2017 marks the 150th anniversary of Canadian Confederation, The Daily will feature monthly highlights of the evolution of Canada’s manufacturing sector.

Total sales in Canada’s manufacturing sector were valued at $21.4 billion in 1958, the first year for which industry level data are available. By comparison, manufacturing sales totalled $614.4 billion in 2016. In 1958, the food and beverage industry (21.3%) accounted for the largest share of manufacturing sales, followed by primary metals (10.3%) and transportation equipment (9.7%). In 2016, the transportation equipment industry (21.2%) represented the largest share of manufacturing sales, followed by the food industry (16.4%) and petroleum and coal products industry (8.4%).

StatsCanada

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell