Monthly Survey of Manufacturing, April 2015
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Manufacturing sales fell 2.1% to $49.8 billion in April, the third decline in four months. Sales were 7.3% lower than their post-recession peak of $53.7 billion in July 2014. The decline in April reflected lower sales of food, aerospace products and parts, and petroleum and coal products.
While sales fell in 8 of 21 industries, these industries account for nearly two-thirds of total Canadian manufacturing. Constant dollar sales fell 1.0%, indicating that a lower volume of goods was sold in April.
Food sales and aerospace production fall
Sales of food dropped 5.7% in April, the largest monthly decline since August 2013, when sales fell 6.7%. The decrease followed a 3.4% gain in sales in March. Sales were lower across the industry as unadjusted sales declined in all nine food manufacturing sub-industries. The largest declines occurred in the dairy product and meat product sub-industries.
Production in the aerospace industry fell 17.8% in April after rising 40.1% in March. The decrease reflected the appreciation of the Canadian dollar in April that reduced the value of sales and inventories in the industry. Because of the volatile nature of aerospace production, examining production levels over three-month periods provides better insight into the industry. Production for the three months ending in April was $4.7 billion, down 13.7% from the three months ending in January, and the lowest level since the three months ending in June 2014.
Sales of petroleum and coal products declined 2.7% in April, following two months of gains. Lower prices and volumes contributed to the decrease. The lower sales in April reflected shutdowns in the industry for turnarounds to summer fuels that generated a larger than usual drop in sales.
Partially offsetting the declines were increases in a majority of industries, including chemicals, computer and electronic products, and plastics and rubber products.
Sales down in every province except Manitoba
Sales fell in every province except Manitoba in April, with nearly two-thirds of the national sales decline attributable to Quebec.
Sales in Quebec were down 5.4% to $11.7 billion, the largest monthly decline in the province in two years. Sales in April were 8.9% lower than their post-recession peak of $12.9 billion in September 2014. This was the second time in three months that provincial sales fell by more than 5%. The largest declines occurred in the aerospace and food industries.
In Alberta, sales were down 1.7%, reflecting lower sales by machinery and petroleum and coal product manufacturers. Machinery sales in the province have fallen for four months and were at their lowest level since December 2012. The decline in the petroleum and coal product industry was linked to partial shutdowns at refineries for turnarounds to summer fuels. The partial shutdowns reduced sales in the industry more than in other years.
Ontario manufacturing sales were down 0.4% in April, the third decline in four months. Over those four months, sales have fallen 4.2%. Sales in Ontario have been trending downward since the beginning of 2015 and were 6.1% lower in April than their post-recession peak posted in July 2014. Lower sales of food and motor vehicles were the largest contributors to the decline.
Manitoba was the lone province to report an increase in April, with sales up 3.0%. This was the third gain in five months in the province. The increase reflected higher sales of transportation equipment.
Inventories rose for the fourth consecutive month, up 0.8% to $72.3 billion in April, the highest level on record since the series began in 1992. Higher petroleum and coal product inventories were partially offset by lower inventories in the transportation equipment and food industries.
The inventory-to-sales ratio rose from 1.41 in March to 1.45 in April. The inventory-to-sales ratio measures the time, in months, that it would take to exhaust inventories if sales were to remain at the current rate.
Lower unfilled orders
The value of unfilled orders fell 2.0% in April, largely as a result of lower unfilled orders in the aerospace industry. The vast majority of unfilled orders in the industry are held in US dollars. From the end of March to the end of April, the value of the Canadian dollar appreciated 4.4%, thereby reducing the Canadian-dollar value of the orders held in US dollars. Also contributing to the decline in total unfilled orders were the machinery, other transportation equipment and fabricated metal product industries.
New orders fell 5.6% in April, reflecting declines in the transportation equipment industry, particularly the aerospace product and parts sub-industry. The higher value of the Canadian dollar was the primary factor in the decline.
Note to readers
Monthly data in this release are seasonally adjusted and are expressed in current dollars unless otherwise specified. For more information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.
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.
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. Production is used due to the extended period of time that it normally takes to manufacture products in those industries.
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.
Manufacturers reporting in US dollars
Some Canadian manufacturers report sales, inventories and unfilled orders in US dollars. These data are then converted to Canadian dollars as part of the data production cycle.
For sales, based on the assumption that they occur throughout the month, the average monthly exchange rate for the reference month (noon spot rate) established by the Bank of Canada is used for the conversion. The monthly average exchange rate is available in CANSIM table 176-0064.
Inventories and unfilled orders are reported at the end of the reference period. For most respondents, the noon spot exchange rate on the last working day of the month is used for the conversion of these variables. Some manufacturers choose to report their data as of a day other than the last day of the month. In those instances the noon spot exchange rate of the day selected by the respondent is used. The noon spot exchange rate is available in CANSIM table 176-0067. Note that because of exchange rate fluctuations, the monthly average exchange rate can differ substantially from the exchange rate on the last working day of the month.
Each month the Monthly Survey of Manufacturing releases preliminary estimates for the reference month and revised estimates for the three previous months. Revisions are made to reflect new information provided by respondents, and updates to administrative data. Once a year, a revision project is undertaken to revise multiple years of data. During annual revisions, changes are made to the seasonal adjustment parameters.
Data from the May Monthly Survey of Manufacturing will be released on July 15.
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