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Monthly Survey of Manufacturing
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Shipments from Canadian factories hit their highest level so far in 2006 in July, but the gain was mainly the result of strong increases in commodity prices.
Canadian manufacturers shipped goods worth $49.9 billion, up 0.8% from June. However, if price increases were taken into account, the overall volume of shipments actually declined 0.6% to $45.1 billion.
Constant dollar shipments (taking price fluctuations into account) in July 2006 were 0.5% higher than they were in July last year, but little growth is seen when comparing the first seven months of 2006 to the same period in 2005.
Benchmarking of the Monthly Survey of ManufacturingWith the July 2006 release, data on shipments, inventories and orders from January 2002 to June 2006 have been updated to reflect the previously published levels from the Annual Survey of Manufactures (ASM). This benchmarking of Monthly Survey of Manufacturing (MSM) data to the ASM is done regularly once the latest ASM data are available. While benchmarking can affect the levels of the data (i.e. the values may be higher or lower than previously published by the MSM), historical month-to-month movements are preserved, as much as possible. Please note that the primary objective of the MSM is to track month-to-month changes to feed the monthly gross domestic product industry estimates (produced by the Industry Accounts Division) while the primary objective of the Annual Survey of Manufacturers is to measure industry levels. Non-durable goods industries include food, beverage and tobacco products, textile mills, textile product mills, clothing, leather and allied products, paper, printing and related support activities, petroleum and coal products, chemicals, and plastics and rubber products. Durable goods industries include wood products, non-metallic mineral products, primary metals, fabricated metal products, machinery, computer and electronic products, electrical equipment, appliances and components, transportation equipment, furniture and related products and miscellaneous manufacturing. Unfilled orders are a stock of orders that will contribute to future shipments assuming that the orders are not cancelled. New orders are those received whether shipped in the current month or not. They are measured as the sum of shipments for the current month plus the change in unfilled orders. Some people interpret new orders as orders that will lead to future demand. This is inappropriate since the "new orders" variable includes orders that have already been shipped. Readers should note that the month-to-month change in new orders may be volatile. This will happen particularly if the previous month's change in unfilled orders is closely related to the current month's change. Not all orders will be translated into Canadian factory shipments because portions of large contracts can be subcontracted out to manufacturers in other countries. Also, some orders may be cancelled. |
Shipments increased in 11 of 21 manufacturing industries in July. Durable goods shipments fell only slightly, as decreases in the aerospace and auto parts industries were not completely offset by increases in the automotive, machinery and computer and electronics industries.
Prices boost petroleum and chemicals manufacturing
July's gain was almost entirely attributed to the strong performance in the petroleum sector, where shipments rose to their highest level on record. This resulted from restored levels of capacity and price increases fuelled by conflict in the Middle East. Excluding petroleum and coal products, manufacturing shipments would have fallen 0.2% in July.
Petroleum products shipments increased 8.4% to $5.8 billion in July after rising 14.8% the previous month. This pushed the value of non-durable goods up 1.8% to $23.1 billion. Prices of petroleum products rose by 5.2% in July, augmenting an already strong increase in production.
In addition, the chemical manufacturing industry had its best month for shipments in 2006, while automotive products also had higher than normal shipments.
Shipments of transportation equipment declined slightly. The largest gain in the sector occurred in automotive manufacturing, where shipments rose 2.7% to $5.0 billion, as auto assembly plants took shorter than usual shutdowns in July.
Aerospace production slipped by 1.5% to $1.2 billion. Most other transportation industries declined in July.
Commodity prices boost provincial shipments
Provincially, July was marginally positive for Ontario. The three Prairie provinces and New Brunswick posted very strong gains in shipments. Quebec shipments fell slightly while British Columbia and Newfoundland and Labrador provided the main off-setting declines.
Quebec shipments fell marginally to $12.1 billion, mainly because of decreases in shipments of transportation equipment (-11.4%) and plastics and rubber products (-8.5%). Petroleum and coal products increased 3.6% while computer and electronic equipment were up 13.9%. Electrical equipment, appliance and component manufacturing increased 11.8%.
Manufacturing shipments in Ontario rose by 0.2% to $24.2 billion. The transportation industry, which accounts for nearly a third of Ontario's manufacturing output, increased 0.8% to $7.8 billion. Automotive manufacturing gained 2.8% to $4.9 billion while the petroleum industry in Ontario posted another solid month, increasing by 8.4% following a 7.1% advance in June. While machinery manufacturing also registered larger than normal gains of 4.0%, primary metals and fabricated metal products shipments declined.
Shipments of petroleum and coal products dominated the manufacturing sector in Alberta, which increased by 4.6% to $5.7 billion. The petroleum and coal industry posted very strong gains of 14.8% to slightly over $1.3 billion and the chemicals industry increased 2.6% to $1.3 billion. However, food shipments declined 6.3% to $724 million.
Manitoba benefited from rising commodity prices, contributing to a 10.1% rise in provincial manufacturing shipments to $1.3 billion.
New Brunswick's petroleum and coal industry accounted for over half of total provincial shipments, the main contributor to a 6.7% increase to $1.4 billion.
Newfoundland and Labrador's 8.7% decline in shipments was mainly due to a 27.2% decrease in food production, while British Columbia shipments fell 3.8% to $3.4 billion — largely as a result of a 12.1% drop in paper production and a 4.6% slowdown in wood products.
| Manufacturing shipments, by province and territory | |||||||
|---|---|---|---|---|---|---|---|
| June 2006r | July 2006p | June to July 2006 | |||||
| Seasonally adjusted | |||||||
| $ millions | % change | ||||||
| Canada | 49,519 | 49,891 | 0.8 | ||||
| Newfoundland and Labrador | 164 | 150 | -8.7 | ||||
| Prince Edward Island | 102 | 101 | -0.5 | ||||
| Nova Scotia | 776 | 781 | 0.6 | ||||
| New Brunswick | 1,291 | 1,378 | 6.7 | ||||
| Quebec | 12,068 | 12,051 | -0.1 | ||||
| Ontario | 24,114 | 24,160 | 0.2 | ||||
| Manitoba | 1,180 | 1,299 | 10.1 | ||||
| Saskatchewan | 861 | 888 | 3.1 | ||||
| Alberta | 5,419 | 5,671 | 4.6 | ||||
| British Columbia | 3,537 | 3,404 | -3.8 | ||||
| Yukon | 2 | 2 | -5.2 | ||||
| Northwest Territories including Nunavut | 5 | 8 | 50.1 | ||||
| |||||||
Inventories increase in metals and transportation
Manufacturers' total inventories increased by $924 million to $63.5 billion in July, following a small decline last month. Transportation inventories rose 3.5% to $8.7 billion, mainly as a result of an 11.3% jump in automotive and a 6.4% increase in auto parts. Inventories of primary metals rose 3.0% to $6.6 billion. Fabricated metal product inventories increased 2.5% to $4.3 billion. Inventory in all three stages of production, (raw materials, goods in process and finished products) increased in July.
Stronger than usual demand raises new orders
The fabricated metals and automotive industries pushed new orders up 2.2% to $50.8 billion in July, while aerospace cooled off after two exceptional months. In spite of the drop in aerospace orders, the rest of the transportation industries were responsible for a 3.0% increase to $10.1 billion. Auto manufacturers took on new orders for models and saw their order books grow by 5.1% to $5.0 billion. Ontario, Alberta and British Columbia experienced higher than normal demand for fabricated metals.
Overall, the trend for new orders remained steady and positive, increasing 0.4%.
Transportation equipment behind rise in unfilled orders
Unfilled orders rose 2.1% to $42.3 billion. Despite falling in recent months, unfilled orders regained some ground to just under the record level seen in March of this year. Unfilled orders in July are 4.2% higher compared to one year ago. July's increase was concentrated in the transportation industry, which increased 3.6% to $21.3 billion. The aerospace industry built on June's success, rising 1.2% to $14.1 billion while unfilled orders for motor vehicles slipped 2.3% to $1.5 billion.
Inventory-to-shipment ratio holds steady
The inventory-to-shipment ratio rose to 1.27 in July from 1.26 a month earlier, as did the finished-product inventory-to-shipment ratio which increased to 0.44 in July from 0.43. The inventory-to-shipment ratio is a key measure of the time, in months, that would be required to exhaust inventories if shipments were to remain at their current level.
Manufacturing employment continues to recede
According to the Labour Force Survey for July, manufacturing continued to experience weakness as employment fell by an estimated 33,000, bringing total losses since the end of 2002 to 224,000 or 9.6%. The losses in July were felt most strongly in Ontario and Quebec.
Available on CANSIM: tables 304-0014, 304-0015 and 377-0008.
Definitions, data sources and methods: survey number 2101.
All data are benchmarked to the 2004 Annual Survey of Manufactures.
Data from the August Monthly Survey of Manufacturing will be released on October 16.
For general information or to order data, contact the dissemination officer (toll-free 1-866-873-8789; 613-951-9497; fax: 613-951-9499; manufact@statcan.gc.ca). To enquire about the concepts, methods or data quality of the release, contact Daryl Keen (613-951-1810, keendar@statcan.gc.ca), Manufacturing, Construction and Energy Division.
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