CA: Manufacturing Sales

Fri Aug 14 07:30:00 CDT 2015

Consensus Actual Previous
Month over Month 2.5% 1.2% 0.1%
Year over Year -3.1% -3.6%

June manufacturing sales were up a less than expected 1.2 percent for the second consecutive gain and the third increase since January 2015. On the year, sales declined 3.1 percent. Expectations had been for a monthly increase of 2.5 percent. In volume, sales were up 0.5 percent.

Sales increased in 18 of 21 industries in June, representing 80 percent of the manufacturing sector. Higher sales of chemical products and motor vehicles led the gains. Lower sales of fabricated metals partly offset the advance. Motor vehicle sales were up for the third month, adding 4.2 percent. On the year, auto sales were up 5.6 percent. The annual increase was their highest level since 2007, the year before the industry reported significant losses as a result of the recession.

Sales of fabricated metal products dropped, partially offsetting the advance. A number of fabricated metal manufacturers bill upon completion of projects, which can take months or years to complete. This leads to volatility in their sales numbers. In June, some manufacturers tied to oil and gas extraction reported lower sales after finishing some long-term contracts in previous months.

Unfilled orders continued their slide, down 1.8 percent from May. With this most recent decline, unfilled orders have fallen for five consecutive months, a trend that has not occurred since 2009 when unfilled orders dropped 14.3 percent over a similar five month period. New orders rose 0.6 percent reflecting widespread increases led by the computer and electronic product industry as well as the chemical product industry. The gains were offset by declines in the aerospace industry.

Manufacturing sales are the Canadian dollar level of factory shipments for manufacturing durable and nondurable goods.

Manufacturer's shipments represent the monetary level of factory shipments for durable and nondurable goods and are a relevant indicator for an export-oriented economy. The data are used by analysts to evaluate the economic health of manufacturing industries. They are also used as inputs to GDP and needless to say, these data are used by the central bank in its decision-making process.

The monthly survey of manufacturing of which shipments is a part, provides a broad look at manufacturing activity levels. The level of activity in manufacturing can be affected by the level of interest rates which slows or stimulates the demand for goods and production. Shipments are an indication of how busy factories have been as manufacturers work to fill orders. The data not only provide insight to demand for items such as refrigerators and cars, but also business investment such as industrial machinery, electrical machinery and computers. Because a large proportion of shipments are headed south of the border to the U.S. and include a wide variety of durables, shipments are affected by U.S. economic activity as well as the exchange rate. Although the focus in this report is on shipments, it also contains information on inventories and new and unfilled orders.

Results from this survey are used by both the private and public sectors including finance departments of the federal and provincial governments, the Bank of Canada, Industry Canada, the System of National Accounts, the manufacturing community, consultants and research organizations in Canada, the United States and abroad.