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Monthly Survey of Manufacturing, January 2016

Released: 2016-03-16

Manufacturing sales rose 2.3% in January to $53.1 billion, the highest level on record. Higher sales of motor vehicles, food, and motor vehicle parts were largely responsible for the gains. More than 85% of the increase in January came from these three industries. Conversely, sales of petroleum and coal products fell 5.9% as prices continued to decline in the industry.

Constant dollar sales rose 2.4% to their highest level since July 2008, indicating that volumes of goods sold reached levels not recorded since before the 2008-2009 recession.

Sales rose in 16 of 21 industries, representing more than 80% of the manufacturing sector.

Motor vehicle sales reach highest level in 15 years

Motor vehicle sales increased 9.6% in January to $6.6 billion, the highest level since November 2000. This was the largest increase in the industry since March 2015. The gains in the motor vehicle industry were the result of two key factors: changes in the industry toward higher-end models and the lower value of the Canadian dollar.

Chart 1  Chart 1: Manufacturing sales increase
Manufacturing sales increase

Again, in January, Canadian manufacturers reported assembling vehicles that were of higher value than the ones built the previous month. Canadian motor vehicle manufacturers have been able to build these higher value vehicles in part because of investments made in plants in Ontario in the first quarter of 2015. While the number of vehicles built has not changed significantly as a result of these investments, the average value of cars built in Canada has increased as production has shifted to more expensive trims and models.

In addition, Canadian motor vehicle manufacturers are benefitting from a lower Canadian dollar. Most motor vehicles made in Canada are exported to the United States and prices are related to the value of the Canadian dollar. As such, the increased value of the US dollar over the past two years has provided some support to the Canadian-dollar value of these sales.

Sales of food rose 4.6% in January to $8.4 billion, the highest value ever recorded. The gain in January was the largest one-month increase since October 2013. In addition, the volume of food sold was the highest in more than 10 years. The food industry is usually one of the more stable industries in the manufacturing sector as demand for food products is relatively inelastic and not significantly affected by the economic cycle.

The motor vehicle parts industry recorded a 4.0% increase in sales to $2.7 billion. This was the fifth consecutive increase in motor vehicle parts sales, which reached their highest level since December 2006. Gains in the industry were widespread as parts manufacturers capitalized on increased demand from motor vehicle assembly plants.

Partially offsetting the higher sales in most industries was a 5.9% decrease in sales of petroleum and coal products. Lower sales reflected a 7.1% drop in the price of petroleum and coal products in January. Sales in the industry were down for the eighth consecutive month, reaching their lowest level since August 2004. Over the course of those eight months, sales fell 27.9% while prices declined 20.3%.

Sales increase in eight provinces

Eight provinces recorded higher sales in January, led by Ontario and Quebec. Increases in these provinces were largely responsible for the total national gain. The only provinces to record declines were Alberta and Nova Scotia.

Sales in Ontario increased 3.9% to $26.4 billion, the eighth increase in nine months. Sales in January were the highest on record for Ontario. The increase reflected gains in the motor vehicle and motor vehicle parts industries, as most of the national activity in these industries occurs in Ontario. In addition, food sales rose 6.9% while fabricated metal product sales were up 7.5%.

In Quebec, sales were at their highest level since September 2014, rising 1.7% to $12.6 billion. This was the third consecutive advance in sales in Quebec. Widespread increases in the food and fabricated metal products industries were responsible for the gain.

Sales in Alberta fell for the sixth time in seven months, largely as a result of lower sales of petroleum and coal products, and fabricated metal products. Because of ongoing declines in refined petroleum product prices, the refining of petroleum products became the third largest manufacturing activity in the province in terms of sales in January. The petroleum and coal product industry (largely refining) had been the largest manufacturing industry in Alberta from January 2009 to September 2015. In October 2015, the petroleum and coal product industry fell to second place, behind the food industry. In January 2016, sales by the petroleum and coal products industry fell to third place, behind both food and chemicals.

Inventories rise

Inventories rose 0.6% in January, the third increase in four months. Inventories rose in 16 of 21 industries, led by the transportation equipment industry. In 11 of the 16 industries with higher inventories, the gain was less than 2.0%.

Chart 2  Chart 2: Inventories rise
Inventories rise

The inventory-to-sales ratio fell from 1.39 in December to 1.36 in January, the lowest level since December 2014. This ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Chart 3  Chart 3: The inventory-to-sales ratio falls
The inventory-to-sales ratio falls

Unfilled orders rise

Unfilled orders advanced 0.4% in January, the first increase after five months of declines. Higher orders in the aerospace product and parts, fabricated metal product, and clothing industries were responsible for most of the gain.

Chart 4  Chart 4: Unfilled orders rise
Unfilled orders rise

New orders increased 6.8% in January, reflecting higher new orders in the aerospace, motor vehicle, food, and fabricated metal product industries.




  Note to readers

Monthly data in this release are seasonally adjusted and are expressed in current dollars unless otherwise specified. For more information on seasonal adjustment, please refer to Seasonally adjusted data – Frequently asked questions.

For more information on the trend-cycle data, see Trend-cycle estimates – Frequently asked questions.

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 metal, fabricated metal products, machinery, computer and electronic products, electrical equipment, appliances and components, transportation equipment, furniture and related products, and miscellaneous manufacturing.

To meet the confidentiality requirements of the Statistics Act, all data for Yukon, the Northwest Territories and Nunavut are aggregated into North American Industrial Classification System code 339 (miscellaneous manufacturing) regardless of the manufacturing activity undertaken.

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. Production is used because of the extended period of time that it normally takes to manufacture products in those industries.

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.

Manufacturers reporting in US dollars

Some Canadian manufacturers report sales, inventories, and unfilled orders in US dollars. These data are then converted to Canadian dollars as part of the data production cycle. For sales, based on the assumption that they occur throughout the month, the average monthly exchange rate for the reference month (noon spot rate) established by the Bank of Canada is used for the conversion. The monthly average exchange rate is available in CANSIM table 176-0064.

Inventories and unfilled orders are reported at the end of the reference period. For most respondents, the noon spot exchange rate on the last working day of the month is used for the conversion of these variables. However, some manufacturers choose to report their data as of a day other than the last day of the month. In these instances, the noon spot exchange rate on the day selected by the respondent is used. Because of exchange rate fluctuations, the noon spot exchange rate on the day selected by the respondent can differ from both the exchange rate on last working day of the month and the monthly average exchange rate. Noon spot exchange rate data are available in CANSIM table 176-0067.

Revision policy

Each month, the Monthly Survey of Manufacturing releases preliminary estimates for the reference month and revised estimates for the three previous months. Revisions are made to reflect new information provided by respondents and updates to administrative data. Once a year, a revision project is undertaken to revise multiple years of data. During annual revisions, changes are made to the seasonal adjustment parameters.

Real-time CANSIM tables

Real-time CANSIM tables 304-8014, 304-8015 and 377-8009 will be updated on April 1. For more information, consult the document Real-time CANSIM tables.

Next release

Data from the February Monthly Survey of Manufacturing will be released on April 15.

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).

To enquire about the concepts, methods or data quality of this release, contact Jeff Paul (613-951-7328; jeff.paul@canada.ca) Manufacturing and Wholesale Trade Division.

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