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Monthly Survey of Manufacturing, August 2016

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Released: 2016-10-18

Manufacturing sales increased 0.9% to $51.1 billion in August, reflecting higher sales of food, primary metal, and petroleum and coal products.

Sales were up in 15 of 21 industries, representing 69% of the total Canadian manufacturing sector. The increase reflected a higher volume of goods sold, as constant dollar sales rose 1.2%.

Chart 1  Chart 1: Manufacturing sales increase
Manufacturing sales increase

Food and primary metal sales lead the gains

In the food industry, sales rose for the second consecutive month, up 1.7% to a record high $8.6 billion. Widespread gains in sales were posted in eight of nine food industries. The largest sales increases in August (in dollars terms) occurred in the dairy, bread and bakery, and fruit and vegetable preserving and specialty food industries.

Sales in the primary metal industry advanced 3.6% to $3.9 billion, the second consecutive monthly gain. The increase in August partly reflected higher sales of iron and steel mill and ferro-alloy, and non-ferrous metal products. The price of primary ferrous metal products rose 0.7% in August, according to the Industrial Product Price Index.

In the petroleum and coal products industry, sales rose 2.5% to $4.4 billion in August, the second consecutive monthly gain. The increase was attributable to higher volumes reported by most refineries, as prices for petroleum and coal products were down 1.2% in August, according to the Industrial Product Price Index.

In contrast, sales in the transportation equipment industry fell 1.1% to $10.5 billion. The decrease was mostly due to lower sales in the motor vehicle industry (-2.2%), which coincided with unusual one-week shutdowns in August at some Canadian automobile assembly plants (these shutdowns, which typically last two weeks, are more customary in July). Sales also declined in the fabricated metals industry (-1.9%).

Sales increase in eight provinces

The rise in manufacturing sales was widespread in August, with eight provinces recording increases. Ontario posted the largest sales gain in dollars terms, followed by Alberta and New Brunswick. The only provinces to record declines were Quebec and Newfoundland and Labrador.

Sales were up 0.8% in Ontario, reflecting gains in 17 of 21 industries. In the machinery industry, sales rose 5.9%, as several industry groups posted higher sales following decreases. Sales of food (+1.6%), beverage and tobacco products (+10.9%) and chemicals (+1.8%) also contributed to the provincial increase.

After a 2.0% decline in July, sales in Alberta were up 2.2% to $5.2 billion in August. The gain was partly the result of advances in the chemical (+4.2%) and food (+2.2%) industries. Despite the rise in August, manufacturing sales in Alberta were down 7.6% compared with August 2015.

In New Brunswick, sales rose 7.4% to $1.4 billion, as sales of durable goods increased 24.4% and sales of non-durable goods were up 3.9%.

After three gains in five months, manufacturing sales in Quebec fell 1.7% to $11.7 billion in August. The decline was mostly the result of lower production in the aerospace products and parts industry (-6.8%), and lower sales in the fabricated metal product (-7.0%) and chemical (-5.3%) industries.

Inventory levels fall

Manufacturing inventory levels decreased 0.5% to $71.0 billion in August, following a 0.8% increase the previous month.

Inventories fell in 12 of 21 industries. The petroleum and coal product industry recorded the largest drop, with inventory levels down 5.9%, following two months of gains. Lower inventories in the food industry (-1.8%) also contributed to the overall decrease. These declines were partly offset by higher inventories in the transportation equipment industry (+1.1%).

Chart 2  Chart 2: Inventories decrease
Inventories decrease

The inventory-to-sales ratio declined from 1.41 in July to 1.39 in August. 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 declines
The inventory-to-sales ratio declines

Unfilled orders decline

Unfilled orders fell 1.3% to $89.0 billion in August, a second consecutive monthly decline.

The decrease in August was the result of lower unfilled orders in the aerospace product and parts industry (-2.9%). The decline in the aerospace industry was partly due to the depreciation of the US dollar relative to the Canadian dollar during the month. Given that most unfilled orders in the industry are held in US dollars, fluctuations in the value of the Canadian dollar relative to the US dollar can influence trends in the industry. Excluding the aerospace industry, unfilled orders were up 0.7% in August.

The decrease in unfilled orders was partially offset by higher unfilled orders in the railroad rolling stock (+5.9%) and primary metal (+6.6%) industries.

Chart 4  Chart 4: Unfilled orders are down
Unfilled orders are down

New orders fell for the second consecutive month, down 0.9% to $50.0 billion in August as a result of declines in the aerospace product and parts, and computer and electronic products industries. The decrease in August was partially offset by higher new orders in the primary metal and railroad rolling stock industries.




  Note to readers

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

For information on 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 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 and shipbuilding industries, the value of production is used instead of the value of sales of goods manufactured. The value of production is calculated by adjusting monthly sales of goods manufactured by the monthly change in inventories of goods in process and finished products manufactured. The value of production is used because of the extended period of time that it normally takes to manufacture products in these 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. Note that 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 the 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. Statistics Canada will release revised monthly manufacturing data on November 16, 2016, in accordance with standard practices. Sales of goods manufactured, inventories and orders in current dollars will be revised back to January 2013 for unadjusted data and to January 2011 for seasonally adjusted and constant dollar data. The revisions will be based on three sources: new information from respondents, the availability of more up-to-date administrative data, and comparison and reconciliation with information available from the Annual Survey of Manufacturing and Logging Industries. The seasonal adjustment parameters will also be reviewed and updated.

Real-time CANSIM tables

Real-time CANSIM tables 304-8014, 304-8015 and 377-8009 will be updated on October 27. For more information, consult the document Real-time CANSIM tables.

Next release

Data from the September Monthly Survey of Manufacturing will be released on November 16.

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 Michael Schimpf (613-863-4480; michael.schimpf@canada.ca), Manufacturing and Wholesale Trade Division.

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