Canada: Monthly Survey of Manufacturing, September 2017

Manufacturing sales rose 0.5% to $53.7 billion in September, reflecting higher sales in the petroleum and coal product industry.

Overall, sales were up in 7 of 21 industries, representing 28.9% of the Canadian manufacturing sector. Sales of non-durable goods rose 1.7% to $25.4 billion, while sales of durable goods decreased 0.5% to $28.4 billion.

In constant dollars, sales increased 0.7%, indicating that higher volumes of manufactured goods were sold in September.

Petroleum and coal product sales lead the gains

Sales in the petroleum and coal product industry grew 10.3% to $5.5 billion in September, the third consecutive monthly gain. The increase reflected gains in prices and volumes for petroleum and coal product. After removing the effect of price changes, sales in volume terms increased 6.7% in September.

Sales in current dollars also increased in the machinery (+1.9%) and paper (+1.0%) industries. Sales in constant dollars for these industries increased 2.1% and 1.4%, respectively, indicating that higher volumes of goods sold were responsible for the gains.

Partially offsetting these increases in current dollars were declines in the food and transportation equipment industries. Sales in the food industry were down 1.0% to $8.4 billion in September. Widespread decreases in sales were reported, and reflected lower prices and volumes. After removing price effects, sales volumes of the food industry declined 0.4% in September.

Overall sales in the transportation equipment industry declined 0.7% to $10.3 billion, although increases in the railroad rolling stock industry (+66.8%), other transportation equipment (+36.5%) and aerospace product and parts (+5.6%) were posted in September. These gains were not sufficient to offset decreases in the motor vehicle (-5.9%) and motor vehicle parts (-2.5%) industries. After removing price effects, volumes sold declined by 4.5% and 1.2% respectively in these industries, following strong volumes in August.

Manufacturing sales up in seven provinces

Sales rose in seven provinces in September, led by Quebec and New Brunswick.

Manufacturing sales in Quebec rose 1.7% to $13.3 billion, their highest value on record. The growth in September was largely attributable to the petroleum and coal (+24.9%) and the aerospace product and parts (+10.3%) industries. The increases were partly offset by a 2.8% decline in the food industry.

In New Brunswick, manufacturing sales rose 13.1% to $1.7 billion. This was their highest level since November 2014 and reflected higher sales of non-durable goods.

After increasing 2.3% in August, sales in Ontario fell 0.9% to $24.4 billion in September. The decline was largely attributable to lower sales in the motor vehicle (-6.3%), motor vehicle parts (-2.7%) and primary metal (-3.6%) industries. These decreases were partially offset by a 5.0% increase in sales in the machinery industry.

In Alberta, sales declined 0.9% to $5.8 billion, following a 1.6% increase in August. The overall decline in September was largely driven by lower sales in the food product (-4.3%) and chemical (-2.7%) industries.

Inventory levels decline

Inventory levels fell for the fourth consecutive month, down 0.7% to $73.3 billion in September. Inventories were down in 10 of 21 industries, led by the transportation equipment (-2.8%), primary metal (-2.0%) and machinery (-1.7%) industries. These decreases were partially offset by a 4.1% rise in the petroleum and coal product industry.

The inventory-to-sales ratio fell from 1.38 in August to 1.36 in September. 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 decrease

Unfilled orders declined 1.1% to $85.1 billion in September. Most of the decrease was attributable to a drop in unfilled orders in the aerospace product and parts industry, as well as the other transportation equipment industry.

These declines were partially offset by an increase in unfilled orders in the motor vehicle and machinery industries.

New orders decreased 1.7% to $52.8 billion, following a 5.2% gain in August. The decline was mainly attributable to fewer new orders in the aerospace product and parts industry and in the motor vehicle industry. The decrease was partially offset by higher new orders in the petroleum and coal product industry.

StatsCanada

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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