Bloomberg News

Canada June Manufacturing Sales Report (Text)

August 16, 2012

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

Manufacturing sales fell 0.4% to $48.9 billion in June, reflecting a 10.6% drop in sales of petroleum and coal products. Excluding petroleum and coal products, sales rose 1.1%. In June, 12 of 21 industries reported sales increases, representing approximately 60% of Canadian manufacturing.

Manufacturing sales have declined in four of the past six months.

Sales of non-durable goods fell 2.7% while durable goods sales increased 1.6%. Constant dollar sales increased 0.1%.

Petroleum and coal product sales continue to fall

Sales of petroleum and coal products fell 10.6% in June. A number of factors contributed to the decline, including a 4.9% drop in prices, ongoing shutdowns at a number of refineries as well as lower volumes at other refineries. This decline reflected an 18.1% drop in imports of crude petroleum used as raw materials by Canadian refineries, and a 2.9% decline in exports of petroleum and coal products in June.

Sales of petroleum and coal products have fallen 23.2% since the most recent high in March 2012 and are now at their lowest level since August 2010. Nonetheless, sales in the second quarter of 2012 were 2.7% higher than the same quarter of 2011.

Increased sales of machinery and transportation equipment were partially offset by the drop in petroleum and coal product sales.

Transportation equipment sales increased 1.7% to $9.2 billion, the highest level since November 2007. The gain reflected increases in all but one of the transportation sub- industries. Motor vehicle sales advanced 0.7% in June, the 11th increase in 12 months. Sales of motor vehicles were up 40.2% in June compared with June 2011, as the industry recovered from the supply chain disruptions related to the 2011 tsunami. Production in the aerospace product and parts industry rose 2.2%, while sales of motor vehicle parts advanced 1.1%.

Machinery manufacturers reported a 5.2% increase in sales, following two months of declines. The gain reflected higher sales in commercial and service industry machinery manufacturing.

Manufacturing sales down in six provinces

Sales were down in six provinces in June, with the largest declines posted in Alberta and New Brunswick.

Sales in Alberta declined 2.6% to $6.0 billion -- the third consecutive monthly decrease. Petroleum and coal products were the primary reason for the decrease, with sales dropping 19.3% in the industry. Excluding petroleum and coal products, sales in Alberta rose 2.8%. Machinery manufacturers reported a 9.8% increase in sales, the largest in the province. The advance in machinery was led by rising sales in agricultural, construction and mining machinery as well as other general-purpose machinery -- industries that produce products used in oil and gas infrastructure projects.

In New Brunswick, sales fell 12.6% to $1.5 billion following a 9.5% gain in May. The decline was mainly attributable to the non-durable goods industries.

Higher sales in Ontario partially offset the overall declines. Sales advanced 0.5% to $22.6 billion, reflecting a 1.2% gain in the transportation equipment industry. Motor vehicle manufacturing sales rose 0.6%, the 11th·increase in 12 months. Machinery manufacturing also contributed to the gain, up 4.9% to $1.4 billion.

Sales in Saskatchewan rose 8.0% to $1.2 billion, the largest gain since May 2011. This increase was led by the non- durable goods industries.

Inventory levels fall

Inventories fell 1.7% in June to $64.8 billion, the first decrease in three months. Lower inventory levels of petroleum and coal products as well as aerospace product and parts were responsible for the overall decline.

Inventory levels in the petroleum and coal industry decreased 8.4% to $4.6 billion in June, following a 15.6% increase in May. The advance in May reflected accumulated stocks of raw materials and goods-in-process at refineries which were shutdown. In June, the decreases were widespread among the industry and were related to an easing of built up stocks at shutdown refineries as well as lower imports of crude petroleum products.

In the aerospace product and parts industry, inventory levels fell 6.3% to $4.5 billion as a result of lower goods-in- process and finished product. Also contributing to the decline were decreases in the computer and electronic products and machinery industries.

Inventory-to-sales ratio decreases

The inventory-to-sales ratio decreased to 1.32 in June from 1.34 in May. 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.

Unfilled orders rise

Unfilled orders rose 2.2% in June to $64.3 billion, reflecting an increase in aerospace product and parts. Excluding this industry, unfilled orders decreased 1.8% as producers of machinery and computer and electronic products reported fewer unfilled orders.

In the aerospace product and parts industry, unfilled orders increased 6.3% to $32.9 billion. This was the highest level of unfilled orders since April 2009.

Manufacturers in the machinery industry reported a 2.8% decline in unfilled orders in June, the first decrease in five months. Unfilled orders in the computer and electronic products industry fell to their lowest level since December 2004, down 6.4%.

New orders advanced 1.7% to $50.3 billion in June, largely as a result of an increase in aerospace product and parts. The increase was partly counterbalanced by the decline in petroleum and coal products.

Note to readers

The 2011 manufacturing review was released on August 3, 2012. This annual report (11-621-M2012090) examines recent trends for sales by industry and other relevant variables related to manufacturing.

All data in this release are seasonally adjusted and are expressed in current dollars unless otherwise specified. For more information on seasonal adjustment, see Seasonal adjustment and identifying economic trends (http://www.statcan.gc.ca/pub/11-010-x/2010003/part-partie3- eng.htm) .

Preliminary data are provided for the current reference month. Revised data, based on late responses, are updated for the three previous months.

Non-durable goods industries include food, beverage and tobacco products, textile mills, textile product mills, clothing, leather and allied products, paper, printing and related support activities, petroleum and coal products, chemicals, and plastics and rubber products.

Durable goods industries include wood products, non- metallic mineral products, primary metal, fabricated metal products, machinery, computer and electronic products, electrical equipment, appliances and components, transportation equipment, furniture and related products and miscellaneous manufacturing.

Production-based industries

For the aerospace industry and shipbuilding industries, the value of production is used instead of sales of goods manufactured. This value is calculated by adjusting monthly sales of goods manufactured by the monthly change in inventories of goods in process and finished products manufactured.

Unfilled orders are a stock of orders that will contribute to future sales assuming that the orders are not cancelled.

New orders are those received whether sold in the current month or not. New orders are measured as the sum of sales for the current month plus the change in unfilled orders from the previous month to the current month.

To contact the reporter on this story: Ilan Kolet in Ottawa at ikolet@bloomberg.net

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


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