Though Statistics Canada reports that manufacturing sales were down slightly in August, with a 0.2 per cent dip from the previous month, Scotiabank points out that that outcome was better than expected. The drop came after three consecutive monthly advances, two of which were very solid, and the bank says that two-thirds of manufacturing industries actually grew in August. While that shows a resiliency in the sector, a drop in new orders is more worrisome.
The largest declines were in petroleum and coal products, where both prices and sales were down: sales fell 5.2 per cent. Car parts were also down, dropping 4.2 per cent. This is unusual, Statistics Canada says, as parts manufacturers normally report large gains in August following assembly plant re-openings after July re-tooling. While sales of aerospace products and parts were down 3.5 per cent, year-to-date production is still 12.1 per cent higher than at this time last year.
Wood products also made sizable gains, with sales up 5.1 per cent to $2.2 billion. Wood product manufacturers in Quebec, British Columbia and Alberta posted gains.
The auto assembly industry, however, saw the biggest gains, with sales up 6.7 per cent to $5.7 billion. It was the highest sales value in the month of August since 2007. The auto industry gains were enough to put the Ontario manufacturing sector in positive territory for the month, with sales up 1.1 per cent to $25.3 billion. Sales of primary metal products also helped push the sector higher.
In its latest Global Auto Report, Scotiabank reports that auto sales have moderated globally, with double-digit declines in South America and Eastern Europe. In North America and Western Europe, however, sales have gone the opposite way. In the United States, sales “surged” to their highest rate in over a decade in September, with an annualized rate of 18.1 million units. In Canada too, sales hit a new record in September, with 1.98 million units sold. The previous record was set one year ago.
Even with used car prices rising year-over-year in recent months, we estimate that used vehicle affordability in Canada remains at the highest level on record. Based on an average used vehicle transaction price of $13,400 so far this year, we estimate that a typical Canadian family now has to work only 8.1 weeks to purchase a used vehicle. This compares with an average of 9.5 weeks over the past decade and more than 13 weeks at the turn of the millennium.
Another aspect of the auto story is the rise in exports of used cars. In this sector at least, the connection between a lower Canadian dollar and higher exports can be seen vividly. Scotiabank says that the depreciation in the Canadian dollar has fueled a surge in the number of used vehicles being exported to the US and to other markets as well. Exports are on target, it says, to reach 100,000 units this year. excluding pickup trucks. The annual average since 2010 has been 69,000 units.
By the end of August, 23,000 units had been exported to the US, compared to a full-year total of 15,600 in 2014. Exports to the States have been soaring since the dollar fell below 90 cents and surged by 155 per cent in the summer months as the dollar dropped to 76 cents. The greatest volume of cross-border shipments of used cars, more than 80 per cent, is from Ontario.
A combination of affordability and greater availability of cars coming off lease is responsible for the increase in domestic demand. Scotiabank estimates that used cars are at their most affordable prices on record. A typical Canadian family, it says, has to work only 8.1 weeks to purchase a used car, using $13,400 as the average price.