Manufacturing holds steady

OTTAWA — Manufacturing sales edged up a meager 0.1 percent in October — not a significant jump — but basically holding steady after falling in five of the last six months.

According to Stats Canada’s latest monthly report on manufacturing, sales of manufactured goods increased $38 million, reaching $50.2 billion from $50.1 billion in September.

On an industry-by-industry basis, 12 of 21 manufacturing industries increased in October, representing slightly less than half of total manufacturing sales.

Sales of non-durable goods gained 0.2 percent — the first increase in the past five months. Durable good sales remained unchanged in October at $27.3 billion after increasing slightly in September.

On a positive note, aerospace product and parts manufacturers have shown significant strength in 2007, most recently reporting an 8.4 percent jump in production during the month — the third consecutive monthly increase.
Miscellaneous manufacturers — mostly sporting goods and jewellery –also fared well in October, with sales improving by 6.1 percent.

However, manufacturing sales were pulled in the opposite direction, mainly by a 2.3 percent decrease in the transportation equipment industry. Sales by motor vehicle manufacturers were the key factor in this drop, decreasing by 5.8 percent in October.

Provinces Report Mixed Results:

Manitoba experienced the largest decline in sales, falling 6.7 percent to $1.3 billion. Declines in sales were also prominent for Newfoundland and Labrador as the total value of sales tumbled 20.1 percent to $327 million, on the heels of a 14.0 percent drop in September. Lower sales in non-durable goods were the main cause of weakness in the province for both months.

New Brunswick, however, rose 7.1 percent to $1.4 billion, reversing the sharp 11.4 percent fall in September. Sales also advanced in B.C., rising 1.9 percent to $3.6 billion. Paper manufacturers benefited from a return to work within the wood industry as it improved their ability to procure raw materials, a by-product of the wood industry, says Statscan.

Unfilled Orders Losing Lustre:

Manufacturers’ backlog of orders decreased 1.7 percent to $53.2 billion in October, after a similar-sized decrease in September. This was the first time manufacturers reported a back-to-back decrease in unfilled orders since May and June of 2006. Unfilled orders are generally considered an indicator of future strength of manufacturing sales, assuming they aren’t cancelled. Before the recent decreases, the trend for unfilled orders had been steadily improving since the summer of 2006.

The strengthening Canadian dollar played a major role in the monthly decrease of unfilled orders, says StatsCan.

Inventory Levels Down Again:

Manufacturers’ total inventories contracted for a third consecutive month, down by 0.7 percent, largely due to a 1.8 percent decrease in finished goods.
Inventory levels started to trend downwards more noticeably in recent months after peaking in July 2006.

Aerospace products and parts led the inventory decreases, reporting a drop of 4.8 percent to $4.4 billion. The other industry reporting a sizeable decline was petroleum and coal product manufacturers. Inventories decreased 2.6 percent to $3.6 billion for the fifth drop in last six months.

Food products manufacturers were one of the few industries reporting a sizeable build-up of inventories as levels rose 2.1 percent to $5.5 billion for the fifth gain in the past seven months.