CA: Manufacturing Sales

Wed Oct 18 07:30:00 CDT 2017

Consensus Actual Previous
Month over Month -0.7% 1.6% -2.6%
Year over Year 4.3% 3.4%

August manufacturing sales surprised and increased a monthly 1.6 percent following two consecutive monthly declines. The gain was mainly attributable to higher sales in the transportation equipment and petroleum & coal product industries. Sales were up in 8 of the 21 industries, representing 66 percent of the Canadian manufacturing sector. On the year, sales were up 4.3 percent. On a volume basis, more relevant to real GDP, manufacturing sales were up 1.2 percent on the month, indicating that August performance was based on stronger activity rather than a price story.

Transportation equipment industry sales jumped 8.2 percent after falling 13.6 percent in July. This growth was the result of gains in the motor vehicle (+12.9 percent) and motor vehicle parts (+5.7 percent) industries, primarily reflecting higher volumes generated by increased production after the longer-than-usual shutdowns of motor vehicle assembly plants in July. In constant dollars, sales volumes rose 13.3 percent in the motor vehicle and 5.8 percent in the motor vehicle parts industries in August.

Sales in the petroleum and coal product industry increased 3.2 percent for a second consecutive monthly gain. The increase primarily reflected higher prices for petroleum and coal products. After removing the effect of price changes, sales volumes decreased 1.3 percent in August. Sales were also up in the primary metal, machinery, beverage and tobacco product and wood product industries. These gains were widespread and were the result of higher volumes in these industries.

Higher sales in current dollars were partially offset by declines in the chemical and computer & electronic product industries. In constant dollars, sales fell 3.9 percent in the chemical and 6.5 percent in the computer & electronic product industries, indicating that a lower volume of goods sold was behind these declines.

New orders rose 4.4 percent following three consecutive monthly declines. The gain was mostly attributable to more new orders in the transportation equipment, electronic equipment, appliances & components and the petroleum & coal product industries.

Regionally, sales rose in eight provinces, led by Ontario and Alberta.

Manufacturing sales for twenty-one reporting industries are the Canadian dollar level of factory shipments for manufacturing durable and nondurable goods. Volume figures are also provided. The sales statistics form part of a wide monthly report that encompasses information on new orders, backlogs and inventories and is a key input into forecasts of monthly gross domestic product (GDP).

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.