CA: Manufacturing Sales

Mon Nov 16 07:30:00 CST 2015

Consensus Actual Previous
Month over Month 0.4% -1.5% -0.2%
Year over Year -3.0% 0.6%

Manufacturing sales declined a surprising 1.5 percent in September, following a 0.6 percent decrease in August. Lower sales in the motor vehicle assembly and the petroleum and coal product industries were responsible for the decline. This was far off expectations of a monthly 0.4 percent increase. Sales were down in 13 of 21 industries, representing 78.6 percent of Canadian manufacturing. Constant dollar manufacturing sales were down 1.6 percent, indicating that the volume of goods sold was lower in September as well. On the year, sales sank 3.0 percent after increasing 0.3 percent the month before.

In the motor vehicle assembly industry, sales fell 10.3 percent following four months of gains. In August, sales had reached C$5.6 billion, their highest level since March 2007. The decline in September mostly reflected lower numbers of vehicles produced. In contrast to the motor vehicle assembly industry, sales in the motor vehicle parts industry edged down 0.1 percent in September. Sales in the petroleum & coal product industry were down 7.1 percent to C$4.8 billion in September, the fourth consecutive decline. The decrease largely reflected partial shutdowns at a number of refineries during the month for maintenance work. Although refineries often shut down for part of September, this year the shutdowns were more extensive than usual.

Higher sales in the machinery and primary metal industries offset some of the declines. In the machinery industry, sales rose 9.6 percent to C$2.9 billion as a result of widespread gains. Primary metal sales were up 4.3 percent, also as a result of numerous gains.

New orders decreased 2.8 percent, mostly as a result of declines in the transportation equipment industry. Unfilled orders decreased 0.7 percent as a result of a 0.9 percent decline in the transportation equipment 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.