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Monthly Survey of Manufacturing
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Manufacturing sales fell for a third consecutive month in October, decreasing 0.5% to $51.5 billion.
Chart 1
Manufacturing sales down in October
The Canada/US exchange rate, as well as a notable decrease in the price of petroleum and coal products, both affected October's manufacturing results. The change in the exchange rate had a strengthening effect for manufacturers who determine their prices in US dollars. On the other hand, the price of petroleum and coal products dropped 13.5% in October, reducing the value of sales in that industry.
In constant dollars, manufacturing sales decreased 1.8% compared with September, bringing constant dollar sales to their lowest level since December 2001.
In October, 8 of 21 manufacturing industries, accounting for about 40% of total sales, posted decreases.
Aerospace and petroleum industries move in opposite directions
Petroleum and coal product sales led the decrease in October, posting a decline of 7.3% in October that was largely due to lower prices. Petroleum and coal product sales have fallen for four consecutive months, and were 18.1% lower than the peak reached in June 2008.
Note to readersAll data in this release are seasonally adjusted and are expressed in current dollars unless otherwise specified. Preliminary estimates are provided for the current reference month. Estimates, based on late responses, are revised for the three previous months. 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. Production-based industries For the aerospace industry and shipbuilding industries, the value of production is used instead of sales of goods manufactured. This value is calculated by adjusting monthly sales of goods manufactured by the monthly change in inventories of goods in process and finished products manufactured. Unfilled orders are a stock of orders that will contribute to future sales assuming that the orders are not cancelled. New orders are those received whether sold in the current month or not. New orders are measured as the sum of sales for the current month plus the change in unfilled orders from the previous month to the current month. |
On the other hand, the transportation equipment industry advanced 2.3% in October, led by aerospace products and parts production, which increased 23.7% during the month. Many manufacturers in the industry price their products in US dollars, which buoyed their results compared with September.
Alberta reports largest sales decrease since October 2001
In October, seven provinces reported a decrease in manufacturing sales compared with September. Only New Brunswick, Quebec, and British Columbia reported gains during the month.
Manufacturing sales in Alberta fell 6.8% in October, erasing all the gains registered since May 2008. A plant shutdown, combined with a drop in prices, led to a 21.2% decrease in the sales of petroleum and coal products in October. Chemical product manufacturers also contributed to the decrease, as their sales declined 8.6%.
Manufacturing sales in Ontario decreased for a third consecutive month, dropping 1.0% in October. Motor vehicle manufacturing sales fell 5.7% and primarily accounted for lower sales in the province. Much of the weakness in Ontario was due to an automotive plant shutdown that lasted most of the month. Petroleum and coal product sales were also a factor this month, decreasing 7.1%.
Quebec manufacturers reported back-to-back monthly gains, with October sales increasing by 2.9%. Transportation equipment manufacturing sales, led by the aerospace industry, posted an increase of 34.1%, in part due to numerous manufacturers determining their prices in US dollars.
Table 1
Manufacturing sales, provinces and territories
Inventory levels trending higher
After falling to a two-year low in February 2008, inventory levels posted seven increases in eight months. Inventory levels in October rose 1.3% to $68.6 billion, as 16 of 21 industries reported higher inventory levels. Raw material inventories increased the most, up 1.7%.
Chart 2
Inventory levels move higher in October
The change in the exchange rate in October was a major factor in the rising value of inventories. The transportation equipment industry reported the largest inventory increases. Aerospace inventories rose 10.7% while motor vehicle manufacturers' inventories rose 9.1%. Computer and electronic product manufacturers also reported a notable increase to their inventories (+6.5%).
Chart 3
The inventory-to-sales ratio increases to highest level in nine months
However, lower oil prices reduced the value of inventories reported by petroleum and coal product manufacturers (-10.0%).
The inventory-to-sales ratio advanced to 1.33 in October, the highest level since January 2008. The ratio had been trending downward in 2008, reaching 1.25 in July before reversing direction over the last few months. The inventory-to-sales ratio is a measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Unfilled orders posted an increase of 6.8% in October, entirely attributable to the rise of 13.9% in aerospace manufacturing, which in turn was due to changes in the exchange rate. Excluding the aerospace industry, unfilled orders decreased 0.3% in October.
Chart 4
Unfilled orders pushed higher by aerospace industry
New orders also increased notably in October, rising 8.8% after two months of decreases. Excluding the aerospace industry, new orders fell 1.5% compared with September.
Available on CANSIM: tables 304-0014, 304-0015 and 377-0008.
Definitions, data sources and methods: survey number 2101.
Data from the November Monthly Survey of Manufacturing will be released on January 20, 2009.
For more information, or to order data, contact the dissemination officer (toll-free 1-866-873-8789; 613-951-9497; fax: 613-951-3877; manufact@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Elton Cryderman (613-951-4317; elton.cryderman@statcan.gc.ca), Manufacturing and Energy Division.
Table 2
Sales, inventories and orders in all manufacturing industries
Table 3
Manufacturing industries except motor vehicle, parts and accessories
