Monthly Survey of Manufacturing, December 2018
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Released: 2019-02-14
Manufacturing sales declined for the third consecutive month, down 1.3% to $56.4 billion in December on lower sales of petroleum and coal products. Excluding this industry, manufacturing sales declined 0.3%.
Chart 1
Manufacturing sales
Sales fell in 12 of 21 industries, representing 72.7% of manufacturing sales.
Manufacturing sales in volume terms were also down, declining 1.2% in December.
Petroleum and coal sales down
In the petroleum and coal product industry, sales declined for a second consecutive month, falling 10.4% to $5.2 billion, with a decrease in volumes (-5.2%) accounting for about half the decline.
Food manufacturing sales declined 2.3% to $8.6 billion in December, following two consecutive monthly increases. The decrease in December mainly reflected lower sales in the meat manufacturing, dairy manufacturing, and grain and oilseed manufacturing industries.
Partly offsetting these declines were increases in the primary metal (+3.0%), aerospace product and parts (+4.2%) and non-metallic mineral product (+6.1%) industries.
Largest declines in Alberta and Ontario
In Alberta, sales fell 4.0% to $6.1 billion in December, a second consecutive monthly decline. As a result, Alberta manufacturing sales in December were more than $700 million below their October level. The largest decrease in sales occurred in the petroleum and coal product industry, largely due to a drop in prices.
Ontario manufacturers reported a 0.8% sales decrease in December, also the second consecutive monthly decline. The decrease was largely attributable to lower sales in the transportation equipment (-1.0%), food (-2.2%) and petroleum and coal product (-4.6%) industries. Higher sales in the primary metal (+3.2%) and non-metallic mineral product (+5.3%) industries offset some of the declines.
In Quebec, sales rose 0.5% to $14.0 billion, the second consecutive gain. Higher sales of transportation equipment (+5.9%) were responsible for the provincial increase. Sales were also up in the primary metal (+4.9%) and wood product (+10.6%) industries.
Inventory levels rise
Inventory levels increased 0.3% to $84.8 billion in December. Inventories rose in 13 of 21 industries. Higher inventories in the primary metal (+2.1%), machinery (+2.1%) and fabricated metal product (+2.5%) industries contributed to the overall gain. This increase was partly offset by lower inventories in the petroleum and coal product (-7.6%) and transportation equipment (-1.4%) industries. The inventory-to-sales ratio increased from 1.48 in November to 1.50 in December.
Chart 2
Inventory levels rise
Chart 3
The inventory-to-sales ratio increases
Unfilled orders increase
Unfilled orders rose 0.6% in December to $97.3 billion, a third consecutive monthly increase. The growth in unfilled orders was attributable to the aerospace product and parts (+0.5%), machinery (+2.2%) and fabricated metal product (+2.7%) industries.
Chart 4
Unfilled orders increase
Capacity utilization rate
The unadjusted capacity utilization rate for the manufacturing sector decreased from 79.4% in November to 75.9% in December. Declines were widespread and may reflect to some extent regular seasonal variations. The non-metallic mineral product as well as plastic and rubber products industries had the largest declines in December.
Chart 5
The capacity utilization rate declines
The capacity utilization rate for the non-metallic mineral product industry declined for the fourth consecutive month, falling 12.1 percentage points to 56.7% in December. The decline was attributable to lower production in most non-metallic mineral product industries, particularly in the glass and glass product manufacturing and cement and concrete product manufacturing industries.
The capacity utilization rate of the plastic and rubber products industry fell 9.3 percentage points to 64.8% in December. The decrease reflected lower production of plastic and rubber products due to lower orders and seasonal shutdowns at some facilities.
Manufacturing: The year 2018 in review
From 2017 to 2018, sales in the Canadian manufacturing sector rose $34.9 billion, or 5.4%, to $686.4 billion. This was the third consecutive annual gain, following an increase of 6.1% in sales posted in 2017.
In constant dollars, sales increased for the third consecutive year, rising 2.1% in 2018 to $630.6 billion. As per the Industrial Product Price Index, average prices in the manufacturing sector rose 3.9% in 2018 compared with 2017.
In seasonally adjusted current dollars, inventories increased 9.7% to $84.6 billion when comparing December 2018 with December 2017. Over the same period, unfilled orders rose 14.7% to $97.3 billion.
Sales in the petroleum and coal products industry contribute the most to the growth in sales of non-durable goods
Non-durable goods posted sales of $324.4 billion, up 6.7% compared with 2017. In constant dollars, sales rose 1.8% to $310.8 billion.
Sales in the petroleum and coal product industry were up for the second consecutive year, rising 15.2% to $73.2 billion in 2018. This gain primarily reflected higher prices. After removing price fluctuations, sales fell 1.5% to $76.6 billion.
Annual sales in the food manufacturing industry continued to rise in 2018, increasing 2.6% to $103.9 billion. In constant dollars, sales were up 2.5% or $2.3 billion.
Sales in the paper industry (+10.2% or +$2.8 billion) and the chemical product industry (+4.9% or +$2.5 billion) also contributed to the growth in sales of non-durable goods.
Declines in the motor vehicle industry slightly offset increases in sales in other durable goods industries
In 2018, sales of durable goods rose 4.3% to $362.3 billion. Of the 10 industries in the durable goods manufacturing sector, 9 posted an increase in annual sales. In constant dollars, sales increased 2.3% to $319.8 billion.
The fabricated metal product manufacturing industry posted the largest gain (+14.1%). Sales in this industry were $39.9 billion in 2018 due to higher prices for fabricated metal products and construction materials. In constant dollars, sales rose 8.1% to $34.6 billion.
Machinery manufacturing (+8.1% to $39.6 billion) and primary metal manufacturing (+5.4% to $52.0 billion) also contributed to the gain in durable goods sales.
Sales for the transportation equipment industry were up 1.3% despite a drop in sales in the motor vehicle industry. This was the second consecutive year that motor vehicle manufacturing posted a decline in sales, falling 3.8% to $62.1 billion. The downturn was partially attributable to a decrease in US demand for models built in Canada.
Aerospace product and parts manufacturing posted an 11.4% increase in production, while railroad rolling stock manufacturing posted a 33.2% increase in sales due to larger orders.
Manufacturing sector and Customs tariffs
The following analysis is based on unadjusted annualized data.
In 2018, tariffs were applied to Canadian steel and aluminum exports to the United States, steel and aluminum imports into Canada from certain countries, and lumber exports to the United States.
In 2018, sales in the primary metal industry increased 5.4%, largely as a result of higher prices. The price of ferrous metal products rose 14.2% in 2018 compared with 2017.
Sales in the iron and steel mills and ferro-alloy industry were up 17.6%, while steel product manufacturing from purchased steel rose 7.2%, and alumina and aluminum production and processing rose 8.3%.
In the wood product industry, sales increased 4.3%, with the highest gain in veneer, plywood and engineered wood product manufacturing (+9.2%). Sawmill and wood preservation sales rose 2.2%, and other wood product manufacturing was up 3.8%.
Sustainable Development Goals
On January 1, 2016, the world officially began implementation of the 2030 Agenda for Sustainable Development — the United Nations' transformative plan of action that addresses urgent global challenges over the next 15 years. The plan is based on 17 specific sustainable development goals.
The Monthly Survey of Manufacturing is an example of how Statistics Canada supports the reporting on the Global Goals for Sustainable Development. This release will be used in helping to measure the following goal:
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.
Production-based industries
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.
Revision policy
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, 16-10-0014-01 and 16-10-0015-01 will be updated on February 25.
Next release
Data from the Monthly Survey of Manufacturing for January will be released on March 15.
Contact information
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
For more information, or to enquire about the concepts, methods or data quality of this release, contact Bechir Oueriemmi (613-951-7938; bechir.oueriemmi@canada.ca), Mining, Manufacturing and Wholesale Trade Division.
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