Manufacturing sales contracted 2.1 percent in March, the largest decrease since October 2023, albeit holding slightly better than expected. The retreat was mostly volume related as real sales were down 2.0 percent on the month. Sales dropped 3.1 percent year-over-year and declined 0.9 percent in the first quarter.

Looking ahead, indicators are pointing to further weakness, as new orders were down 4.7 percent on the month and unfilled orders down 0.8 percent.

Inventories were flat, lifting the inventory-to-sales ratio to 1.73 from 1.69.

Weaker activity was also expressed through a 0.3 percentage point decline in the unadjusted capacity utilization rate to 78.0 percent in March, driven by non-durable goods industries.

In March, declines were widespread across 16 of 21 industries, led by an 8.0 percent fall in petroleum and coal and a 7.9 percent drop in motor vehicles. Excluding motor vehicles and parts, sales were still down 1.7 percent from February.

In an encouraging sign for investment activity, however, machinery rose 2.9 percent on the month, one of four sectors recording higher sales.

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

After increasing 0.7 percent in February that, however, followed no change in January, manufacturing sales in March are expected to fall 2.8 percent.

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.