Bloomberg News

Canada November Manufacturing Sales Report (Text)

January 18, 2013

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

Manufacturing sales increased 1.7% in November to $49.9 billion, the highest level since May 2012. The largest gains were in the transportation equipment, primary metal and chemical industries.

Sales rose in 12 of 21 industries, representing about two- thirds of the manufacturing sector. Durable goods sales increased 2.7% to $25.5 billion while non-durable goods sales gained 0.8% to $24.4 billion.

Constant dollar sales rose 1.6%, indicating that most of the gain in manufactured goods sold was a result of higher volumes.

Sales rise in several key industries

The gain in the transportation equipment industry accounted for more than a third of the total increase in Canadian manufacturing sales. Sales in the industry were up 3.8% to $8.7 billion. The advance in transportation equipment partly reflected a 4.1% increase in the motor vehicle industry and a 6.5% rise in the aerospace product and parts industry.

In the primary metal industry, sales rose 5.9% to $4.0 billion, the highest level since April 2012. The gain was the largest since July 2011.

Sales in the chemical industry increased 3.9% to $4.1 billion. The advance partly reflected higher production at several plants following slowdowns for maintenance and repair work.

Miscellaneous manufacturing sales rose 11.9% to $961 million, the highest level since December 2011. This gain followed two months of declines.

Sales gains led by Ontario

Manufacturing sales were up in five provinces, led by Ontario.

Sales rose 3.8% to $23.0 billion in Ontario, reflecting advances in 14 of 21 industries. A 5.2% increase in the transportation equipment industry accounted for the largest portion of the provincial advance. Gains in the industry were reported by both motor vehicle and aerospace product and parts manufacturers. Sales also rose in the primary metal (+15.8%), and the petroleum and coal product (+7.0%) industries.

Sales in New Brunswick rose 11.7% to $1.8 billion, mostly reflecting an advance in the non-durable goods industries.

Manufacturing sales were down 1.8% in Alberta and 0.9% in Quebec. For Alberta, the decrease reflected a drop in petroleum and coal product sales (-6.7%) while in Quebec, lower non- durable goods sales were behind most of the decline.

Inventories decrease

Inventories declined 0.8% to $65.5 billion in November, largely reflecting drops in the petroleum and coal product, and computer and electronic product industries.

In the petroleum and coal product industry, total inventories were down 4.5% to $5.1 billion. The decrease was caused by lower inventories in all three stages of fabrication.

Inventories of computer and electronic products declined 6.9% to $2.8 billion. The inventory level in November was the lowest since August 2011.

The inventory-to-sales ratio decreased from 1.35 in October to 1.31 in November. The 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.

Manufacturing at a glance: Inventories

From time to time, this release analyzes longer trends in Canadian manufacturing data. This month, the focus is on inventories. Despite the decrease in November, inventories have been on a gradual rise for the past two years. For the first 11 months of 2012, the monthly average value for total inventories was $65.2 billion, the highest level for this period since 2008. Each stage of fabrication (raw materials, goods-in-process, and finished products) posted higher levels in 2012.

Inventories of raw materials increased in both 2011 and 2012, reaching a monthly average of $26.0 billion for the January to November 2012 period. This level was $2.4 billion higher than the same period in 2010, when the monthly average value for raw material inventories had reached its most recent low.

The monthly average goods-in-process inventories posted the largest dollar increase of the three inventory categories in 2012. Compared with the same period in 2011, goods-in-process inventories rose $1.0 billion to a monthly average of $17.5 billion for the period January to November 2012.

Finished product inventories rose to a monthly average of $21.7 billion for the January to November 2012 period. This represents a 2.8% increase compared with the same period in 2011. Finished product inventory levels in 2012 were at their highest level since 2008.

The share of the three stages of fabrication relative to total inventories has evolved over the past decade. In 2012, raw materials accounted for 39.8% of total inventories, compared with 44.5% in 2004, their greatest proportion for the past 10 years. Although goods-in-process inventories continued to account for the smallest share of total inventories, the share has been on the rise since 2004. For 2012, goods-in-process inventories accounted for 26.9% of total inventories, the highest since 2002. Despite the increase in finished product inventories in 2012, their share of total inventories decreased to 33.3%, the lowest point since 2002.

In 2012, four of the six largest manufacturing industries by value of inventories posted increases compared with 2011. The largest industry by inventory value, transportation equipment, held a monthly average of $9.3 billion in inventories. For the period January to November 2012, transportation equipment inventories rose $802 million compared with the same period in 2011. Inventories of machinery, food, and fabricated metal products also advanced compared with 2011. On the other hand, inventories of primary metals and chemical products decreased.

Substantial advance in unfilled orders in November

Unfilled orders advanced 3.6% to $64.1 billion in November, reaching the highest level since March 2009. The increase reflected higher orders in the transportation equipment industry.

In the aerospace product and parts industry, unfilled orders rose 7.8% to $34.2 billion, also the highest level since March 2009.

New orders rose 6.2% in November, the largest gain since March 2011. The increase was the result of more orders placed in the transportation equipment industry.

Note to readers

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://www5.statcan.gc.ca/bsolc/olc-cel/colc-cel?catno=11-010- X201000311141&lang=fra) .

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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