Bloomberg News

Canada May Manufacturing Sales Report (Text)

July 17, 2012

The following is the text of Canada’s manufacturing shipments report for May released by Statistics Canada.

Manufacturing sales declined 0.4% to $48.7 billion in May, the fourth decrease in five months. Sales in the petroleum and coal product industry dropped 9.6%, reflecting temporary shutdowns at some refineries. This drop was largely offset by gains in the aerospace product and parts industry. Excluding the petroleum and coal product industry, total manufacturing sales rose 1.2%.

Sales fell in 13 of 21 industries, representing approximately two-thirds of manufacturing. Sales of non-durable goods declined 3.2%, while durable goods sales rose 2.4%.

Constant dollar sales increased 0.2% in May, reflecting a rise in the volume of durable goods sold.

Despite four monthly declines in overall manufacturing sales in 2012, manufacturing employment has continued to increase. Employment rose 2.0% in May according to the Labour Force Survey. Since January 2012, employment in the manufacturing sector has risen 4.5% to 1.8 million workers.

Chart 1 Current dollar sales decrease

CSV version of the chart

Sales drop in petroleum largely offset by higher aerospace production

Sales in the petroleum and coal product industry fell 9.6% to $6.4 billion. The drop reflected temporary shutdowns at some refineries and lower prices. Even with the decrease in May, sales of petroleum and coal products were slightly higher than they were in May 2011 ($6.3 billion).

Sales declines were also reported by manufacturers in the machinery (-3.5%) and other transportation equipment (-26.1%) industries.

Production in the aerospace product and parts industry rose 65.8% to $1.5 billion, following a 34.8% decrease in April. Despite the increase in May, year-to-date production in the industry was 6.5% lower than it was in the same period in 2011.

In the fabricated metal product industry, sales rose 2.8%. Sales in the motor vehicle industry increased 1.6% to $4.6 billion, its 10th increase in 11 months. Sales in the motor vehicle industry were at their highest level since November 2007.

Sales decline in four provinces

Sales decreased in four provinces in May, with Ontario and Alberta posting the largest declines in dollar terms.

Sales in Ontario declined 1.9% to $22.4 billion, the first decrease following two months of increases. A 31.8% drop in sales for petroleum and coal products was responsible for the reduction and reflected temporary shutdowns at petroleum refineries. However, increases in the aerospace product and parts (+52.3%) and motor vehicle industries moderated the decrease. Motor vehicle manufacturers reported a 1.7% rise in sales to $4.5 billion, following a 10.0% advance in April.

In Alberta, sales fell 2.6% to $6.1 billion. The petroleum and coal product industry was mostly responsible for the drop, with sales down 7.7%. This was the third consecutive monthly decrease for the industry and reflected temporary shutdowns. Sales in the machinery industry (-4.8%) also dropped in May.

Gains in six provinces partly offset the decreases in Ontario and Alberta. In Quebec, sales increased 2.2%, reflecting gains in aerospace product and parts. Production in this industry rose 85.6% in May, following a 45.6% drop in April. In New Brunswick, gains in the non-durable goods industry drove the 9.0% increase in sales.

Inventory levels rise

Inventories advanced 2.1% in May to $66.0 billion, almost entirely as a result of a sharp increase in the petroleum and coal product industry. With this advance, total inventories were at their highest level since January 2009.

In the petroleum and coal product industry, total inventories increased 29.5% (+$1.3 billion) to $5.6 billion. Over 61% of the increase reflected higher raw materials held at a number of refineries. Gains in goods-in-process and finished product inventories also contributed to the advance.

Higher inventories in the motor vehicle (+6.0%) and the computer and electronic product (+2.2%) industries also contributed to the overall advance in May.

Chart 2 Inventory levels rise

CSV version of the chart

The inventory-to-sales ratio advanced to 1.35 in May from 1.32 in April. The inventory-to-sales ratio is a measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Chart 3 The inventory-to-sales ratio advances

CSV version of the chart

Unfilled orders increase

Unfilled orders rose 0.7% to $63.1 billion in May. The advance reflected increases in the aerospace product and parts industry and the fabricated metal products industry. A 4.7% decline in the computer and electronic product industry offset a portion of the gains.

In the aerospace product and parts industry, the value of unfilled orders increased 1.8% to $31.0 billion. The increase in May reflected a rise in the value of the US dollar relative to the Canadian dollar, as a large portion of unfilled orders in the industry are held in US dollars.

Unfilled orders in the fabricated metal product industry rose 2.4% to a high of $6.9 billion in May. Gains in unfilled orders for architectural and structural metals were responsible for a large portion of the advance in the industry.

Chart 4 Unfilled orders increase

CSV version of the chart

New orders were relatively flat in May at $49.2 billion, following a 2.6% decrease in April.

To contact the reporter on this story: Dominic Carey in Washington at cmiddleton2@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net


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