Canada: Monthly survey of manufacturing, November 2018

Manufacturing sales fell 1.4% to $57.3 billion in November, the second consecutive monthly decrease. The decline in November mainly reflected lower sales of petroleum and coal products. Excluding this industry, manufacturing sales rose 0.2%.

Sales were down in 13 of 21 industries, representing 45.3% of total manufacturing sales. Sales of non-durable goods fell 3.4% to $27.2 billion, while sales of durable goods rose 0.5% to $30.1 billion.

In volume terms, manufacturing sales decreased 0.9%.

Petroleum and coal products industry posts the largest decrease

Sales in the petroleum and coal product industry fell 13.8% to $5.9 billion in November, following two consecutive monthly increases. Lower prices for petroleum and coal products (-6.8%), as well as maintenance and turnaround work at some refineries and lower production at other refineries, contributed to the decline in November. Constant dollar sales of petroleum and coal products declined 8.4%.

Chemical product sales fell 2.1% to $4.7 billion in November, following four consecutive monthly gains. There were widespread declines in most chemical manufacturing industries, particularly in the pesticide, fertilizer and other agricultural chemical manufacturing industry. In constant dollars, sales volumes of chemical products fell 1.3% in November.

Partially offsetting these declines were increases in the transportation equipment and food industries. In the transportation equipment industry, sales rose 1.3% to $11.0 billion in November, following a 0.7% decline in October. The increase in November was mainly due to higher production at aerospace product and parts (+7.7%) and railroad rolling stock (+28.6%) industries.

Sales in the food industry rose for the second consecutive month, up 1.5% to $8.9 billion in November. The increase was largely attributable to higher sales in the grain and oilseed milling industry.

Sales down in six provinces

Sales fell in six provinces in November, with Alberta and Ontario posting the largest dollar declines.

Alberta manufacturing sales fell 6.8% to $6.3 billion in November, the second consecutive monthly decrease. The decline was mainly the result of lower sales in the petroleum and coal product (-14.0%) and chemical (-9.3%) industries.

Following two consecutive monthly increases, sales in Ontario fell 1.1% to $26.4 billion in November. The decline was largely attributable to lower sales in the petroleum and coal product (-11.5%), motor vehicle (-2.8%) and motor vehicle parts (-3.6%) industries.

Sales in Quebec rose 0.9% to $13.9 billion in November, following two consecutive monthly declines. The increase reflected gains in the aerospace product and parts (+6.1%) and food (+2.7%) industries. Sales were also up in the motor vehicle and fabricated metal product industries. Lower sales in the petroleum and coal product industry offset some of the gains.

Manufacturing sales in Manitoba rose for the second consecutive month, up 5.2% to $1.7 billion in November on higher sales of durable goods.

Inventory levels decrease

Inventory levels fell 0.6% to $84.4 billion in November. Inventories were down in 12 of 21 industries, led by the petroleum and coal product (-10.2%), machinery (-2.9%) and food (-1.3%) industries. These decreases were partially offset by a 2.3% rise in the primary metal industry.

The inventory-to-sales ratio rose from 1.46 in October to 1.47 in November. This ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders increase

Unfilled orders rose 0.3% in November to $96.6 billion, the second consecutive monthly increase. The gain reflected a 0.6% increase in the aerospace product and parts industry to $53.3 billion. Unfilled orders in the aerospace product and parts industry represented 55.2% of total manufacturing unfilled orders.

Unfilled orders were also up in the computer and electronic product and fabricated metal product industries.

New orders fell 2.9% to $57.6 billion, following a 2.4% increase in October. The decline in November was mainly the result of lower new orders in the petroleum and coal product, transportation equipment and machinery industries.

Capacity utilization rate

The unadjusted capacity utilization rate for the manufacturing sector decreased from 80.5% in October to 78.8% in November.

Overall, the capacity utilization rate fell in 14 of 21 industries, with the petroleum and coal product and non-metallic mineral product industries posting the largest declines in November.

The capacity utilization rate for the petroleum and coal product industry declined for the fourth consecutive month, down 8.8 percentage points to 70.3% in November. Turnarounds and maintenance work at some refineries as well as lower production at other refineries were partly behind the lower capacity utilization rate.

The capacity utilization rate of the non-metallic mineral product industry decreased 8.4 percentage points to 67.6%, mainly due to the lower capacity utilization rate in the cement and concrete product industry.

The capacity utilization rate of the electrical equipment, appliance and components industry rose 5.6 percentage points to 82.7% in November. The increase was mostly attributable to gains in the household appliance and electrical equipment industries.

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