Petroleum spurs manufacturing sales increase

OTTAWA — After holding steady in October, manufacturing sales increased slightly by 1.1 percent the following month.

According to Stats Canada, sales improved by $573 million to $50.6 billion with almost all of the increase resulting from a surge in petroleum and coal products, which benefited from sharply rising prices.

Overall, just 11 out of 21 manufacturing industries increased their sales in November, although this represented almost two-thirds (65.5%) of total manufacturing.

Sales of non-durable goods looked to continue a turn-around, gaining 1.6 percent in November for a second consecutive month. These increases followed on the heels of four months of declining sales. Durable goods also reported an increase in November, with sales up 0.8 percent.

Unfilled factory orders advanced for the first time in three months, gaining 4.9 percent, while new orders rebounded, jumping 8.1 percent and slowing the downward trend seen throughout most of 2007.

The provincial picture for manufacturing was
generally positive, as seven provinces posted increases.

Petroleum and coal product manufacturers reported the most significant jump in sales, increasing by 7.7 percent or $424 million in November. However, excluding petroleum and coal manufacturers, sales increased a more modest 0.3 percent.

Another area of improved sales was the primary metal industry, which edged up increased 2.3 percent, despite prices falling. Most of the strength was located in the central provinces, with Manitoba, Ontario and Quebec all posting increases.

On the down side, paper product sales sagged 3.0 percent in November, as manufacturers continued to struggle with falling prices in the industry. Prices for paper products have decreased in eight of the past nine months. Chemical product sales dropped also dropped by 1.7 percent.

The provincial picture for manufacturing sales in November was generally positive, as seven provinces posted increases. Solid sales were seen across the Western and Central Provinces, while weakness was limited to the coasts.

New Orders Spring Back:

New orders surged to a four-month high, jumping 8.1 percent to $53.2 billion. The transportation equipment industry was responsible for most of the increases, while fabricated metal industries also saw improvements.

Despite the jump, new order levels have been trending lower after peaking at $56.2 billion in January 2007, with decreases in 7 of the past 10 months.

Inventory Levels Post 1st Increase since July:

Manufacturers reported total inventory levels increased by 0.5 percent in November, the first gain in four months. The boost was widespread, as raw materials (+0.3%), goods and work in process (+0.6%), and finished product inventories (+0.7%) all increased.

The key contributor to the increase came from petroleum and coal products, which jumped 12.9 percent, while the aerospace product and parts industry also surged, gaining 4.3 percent.