Monthly Survey of Manufacturing, July 2018
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Manufacturing sales increased for the third consecutive month in July, rising 0.9% to $58.6 billion. Higher sales in the transportation equipment and chemical industries drove the increase.
Overall, sales were up in 11 of 21 industries, representing 68% of total manufacturing sales. Non-durable goods rose 1.4% to $27.7 billion, while durable goods increased 0.5% to $30.9 billion.
Constant dollar sales increased 1.0%, indicating that a higher volume of goods was sold in July.
The transportation equipment and chemical industries drive manufacturing growth
The gain in the transportation equipment industry accounted for more than half of the total increase in Canadian manufacturing sales in July. Sales in the industry were up 2.6% to $10.9 billion, mostly as a result of gains in the motor vehicle and the railroad rolling stock industries. In July, scheduled shutdowns for some assembly plants were shorter than in previous years. Sales in the motor vehicle assembly industry rose 3.0% to $5.4 billion, a second consecutive monthly increase. Sales in the railroad rolling stock industry were up 63.4% to $275 million, following a 30.4% decline in June. Sales in this industry tend to be volatile compared with transportation equipment as a whole.
Sales in the chemical industry rose 4.6% to $4.6 billion, following a 5.4% decline in June. Gains in the basic chemical industry reflected higher production after maintenance and turnaround work at some facilities earlier in the summer. After removing the effect of price changes, the sales volume of chemical products increased 5.0% in July.
In the petroleum and coal product industry, sales were up 2.4% to $6.5 billion. With the increase in July, sales were at their highest level since October 2014 and reflected higher production in most refineries. In constant dollars, sales in this industry were up 1.5% in July.
These increases were partially offset by declines in the aerospace product and parts (-5.7%), furniture and related product (-6.9%) and fabricated metal product (-2.0%) industries.
Transportation equipment in Ontario sustains the manufacturing sector
Higher sales in Ontario were mainly responsible for the gains at the national level in July. Declines in British Columbia partially offset the increase.
In Ontario, sales rose 2.1% to $27.1 billion in July. Most of the provincial gain stemmed from a 3.6% increase in the transportation equipment industry. Sales were up in the petroleum and coal product (+9.3%), the chemical (+4.0%) and the food (+2.2%) industries. A 4.8% decline in sales of fabricated metal products offset some of the gain.
For a third consecutive month, sales rose in Alberta, increasing 1.7% to $6.6 billion in July. Higher sales in the chemical products (+7.9%) and electrical equipment, appliance and component (+49.9%) industries were the main contributors to the dollar increase.
Following two consecutive months of gains, British Columbia posted the largest monthly decrease, with sales declining 1.7% to $4.7 billion in July. Lower sales in the primary metal (-14.9%) and wood product (-2.6%) industries were responsible for the decline in the province.
Inventory levels rise
Total manufacturing inventories increased 1.2% to $82.9 billion in July. The gains were led by higher inventories in the machinery (+3.0%) and the petroleum and coal product (+3.5%) industries. Inventories of aerospace product and parts equipment declined 1.5%.
The inventory-to-sales ratio was unchanged at 1.41 in July. The ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Unfilled orders unchanged
Unfilled orders were unchanged at $94.4 billion in July, following five consecutive monthly gains. The largest increase in unfilled orders was posted by the motor vehicle industry, followed by the electrical equipment, appliance and component industry.
These increases were offset by a decline in unfilled orders in the aerospace product and parts industry, as well as in the primary metal industry.
New orders decreased for a second consecutive month, down 1.8% to $58.6 billion in July. The decline mostly reflected lower new orders in the aerospace product and parts industry and in the machinery industry.
Capacity utilization rates
The manufacturing sector capacity utilization rate, unadjusted for seasonal effects, decreased 4.6 percentage points, from 83.5% in June to 78.9% in July. While declines were widespread, the transportation equipment industry contributed the most to the decrease in July. The capacity utilization rate in the industry fell from 88.3% in June to 74.6% in July. Shutdowns at several auto manufacturing establishments were responsible for the lower rate.
The capacity utilization rate for the petroleum and coal product industry increased for the second consecutive month, rising from 89.6% in June to 90.5% in July. The gain was attributable to an overall ramping up of production in most refineries.
Note to readers
Monthly data in this release are seasonally adjusted and are expressed in current dollars unless otherwise specified.
For information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions. For information on trend-cycle data, see Trend-cycle estimates – 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 metals, 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 and shipbuilding industries, the value of production is used instead of the value of sales of goods manufactured. The value of production is calculated by adjusting monthly sales of goods manufactured by the monthly change in inventories of goods in process and finished products manufactured. The value of production is used because of the extended period of time that it normally takes to manufacture products in these 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 sales, inventories and unfilled orders 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 established by the Bank of Canada is used for the conversion. The monthly average exchange rate is available in table 33-10-0163-01. 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.
However, some manufacturers choose to report their data as of a day other than the last day of the month. In these instances, the daily average exchange rate on the day selected by the respondent is used. Note that because of exchange rate fluctuations, the daily average exchange rate on the day selected by the respondent can differ from both the exchange rate on the last working day of the month and the monthly average exchange rate. Daily average exchange rate data are available in table 33-10-0036-01.
Each month, the Monthly Survey of Manufacturing releases preliminary data for the reference month and revised data for the three previous months. Revisions are made to reflect new information provided by respondents and updates to administrative data.
Real-time data tables
Real-time data tables 16-10-0118-01, 16-10-0119-01 and 16-10-0014-01 will be updated on October 1.
Data from the Monthly Survey of Manufacturing for August will be released on October 17.
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For more information, or to enquire about the concepts, methods or data quality of this release, Bechir Oueriemmi (613-951-7938; email@example.com), Manufacturing and Wholesale Trade Division.