Canada. Manufacturing sales up

Manufacturing sales advanced 2.0% in October to $42.5 billion. This was the fourth increase in five months. Even with these recent gains, manufacturing sales remained 16.6% below October 2008.

Most of the manufacturing gains in October were focused in two industries — aerospace product and parts, and petroleum and coal products.

Constant dollar manufacturing sales rose 1.2% in October, and have also increased in four of the past five months.

Sales advanced in 15 of the 21 manufacturing industries, accounting for about 72% of total sales.

Aerospace and petroleum behind October's gains

In October, most of the gains were centred in the aerospace product and parts, and petroleum and coal product industries.

Aerospace product and parts production advanced 54.1% in October, following two months of steep declines. Production in this industry has been particularly volatile over the past year.

Petroleum and coal product sales rose 7.2% in October. Sales have generally been increasing in 2009 following a sizeable drop at the end of 2008. Rising prices in the industry have contributed to almost all of the sales increases since the start of 2009.

Motor vehicle sales increased 2.9% in October compared with September. This industry has reported higher sales in three of the past four months.

Of the industries reporting lower sales, fabricated metal products led the declines, losing 4.4% in October. Most of the weakness reflected a return to more normal sales levels after several major orders were completed in September.

The increase in total manufacturing sales for September was revised to 1.0% from 1.4%. The monthly increase in motor vehicle manufacturing sales was revised to 7.4% from 16.4% for September, in light of new information received from respondents.

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 metals, 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.

Quebec manufacturers account for most gains in October

Sales in Quebec were up 7.3% in October, reaching the highest level since December 2008. Sales were driven by gains in the transportation equipment (+44.6%), petroleum and coal product (+19.2%), and primary metal (+11.7%) industries.

Excluding Quebec, manufacturing sales were basically flat, rising 0.2%.

Sales in the Prairie provinces were down 1.7% compared with September, mostly as a result of declines in Saskatchewan. Sales in Saskatchewan fell 12.6% in October after a similar sized gain in September. Manufacturers in the petroleum and coal industry as well as the food industry had been influenced by a later than normal harvest this year.

Manitoba (-0.9%) also reported weaker sales for October. Alberta, by contrast, posted a 0.5% sales gain as increases in the petroleum and chemical products industries outweighed losses in the food and fabricated metal industries.

Non-durable goods industries were up, led by petroleum and coal products (+6.2%) and food manufacturing (+1.9%). Inventories decreased in 8 of 10 durable goods industries, led by a decline in the primary metal industry (-2.5%).

The inventory-to-sales ratio decreased to 1.41 in October, the fourth decline in five months. Most of the drop in October reflected rising sales, pushing the ratio to its lowest level since October 2008.

Unfilled orders fall for fourth straight month

The backlog of unfilled orders fell 3.4% in October to $51.8 billion. This was the fourth consecutive decline and the lowest level since April 2007. The decrease in unfilled orders was led by a 6.1% drop within the aerospace product and parts industry, which was in part due to a strengthening Canadian dollar. Unfilled orders in the fabricated metal product industry were down 3.8% compared with September.

Excluding the aerospace product and parts industry, unfilled orders declined 0.7% in October.

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