Auto still drags down manufacturing; But Prairie sales jump

OTTAWA — Following recent export trends, Canadian manufacturing edged lower in August, due to a weaker motor vehicle industry.

Manufacturing sales pulled back 1.7 percent in August, erasing the 1.3 percent gain from July. Sales of goods manufactured decreased to $51.2 billion from $52.1 billion a month earlier, reports Stats Canada.

Manufacturing sales continued to be heavily influenced by fluctuations in the transportation equipment industry, which in particular was weak as demand in the United States continued to slump. Manufacturers’ sales of motor vehicles tumbled 12.8 percent in August, and motor vehicle parts sales dropped 11.6 percent.

Excluding these two sectors, total manufacturing sales increased 0.2 percent in August.

On an industry-by-industry basis, 11 of 21 manufacturing industries, representing about 56 percent of total sales, decreased in August.

Sales of durable goods dropped 2.8 percent — the fourth decrease in the past five months and mirrored declines in the transportation sector. Non -durable good sales were also down in August, decreasing by 0.4 percent for a third consecutive monthly decline.

Wood product manufacturers reported a sales drop of 2.3 percent for a second month of declines. Ongoing strikes in Western Canada, in addition to falling lumber prices and slumping demand in the U.S., are affecting the industry.

Manufacturing sales were evenly split at the provincial level in terms of gains and losses. However, a sharp decrease in Ontario sales overshadowed some strength amongst the remaining provinces, such as Saskatchewan, which had a strong month of sales, surging ahead 15.4 percent compared with July.

Most of the strength came from a jump in primary metal manufacturing, due in part to a company takeover and expansion over the summer. Food product sales were also strong, gaining 8.2 percent.

Newfoundland and Labrador also reported improved results with an increase of 12.7 percent after a 24.6 percent slump the previous month. Most of the gains were due to stronger sales of food products and petroleum and coal products compared with July.

Unfilled Orders Slow After Strong Year:

For the first time in 12 months, manufacturers’ backlog of orders edged down slightly (-0.1%) to $54.9 billion. However, unfilled orders remained 33 percent above levels in August 2006. Unfilled orders may be considered an indicator of future sales, assuming orders are not cancelled.

Strong demand for both defense and civilian aircraft and parts had been driving much of the strength in unfilled orders over the past 12 months.
However, unfilled orders for miscellaneous manufacturers also slowed in August, gaining only 0.4 percent.

These lower than normal increases were offset by sizeable decreases in two industries. Non-metallic mineral product manufacturers reported a widely based 13.4 percent decrease while plastic and rubber product manufacturers also reported lower levels of unfilled orders, down 9.2 percent.