Lower sales, increasing orders for Canada’s manufacturers in January

There was a mix of  bad and good news for Canada’s manufacturing industries as Statistics Canada released its report on manufacturing sales in January. Sales were down 0.2 per cent to $48.0 billion, the fourth decline in five months. Overall, 7 of 21 industries posted lower sales in January, representing approximately 52 per cent of the manufacturing sector.

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Unfilled orders rose 10 per cent to a record $39.6 billion in the aerospace product and parts industry in January, the fourth consecutive monthly increase. Unfilled orders have advanced 26.2 per cent since September 2012.

Sales in the transportation equipment industry declined 3.8 per cent to $7.5 billion, mostly because of a drop in aerospace parts and products, while a decline of 3.7 per cent in the auto assembly industry contributed to the decline in transportation equipment sales.

Other industries that saw declines were petroleum and coal products and the food industry.

The decline in sales was spread across several provinces, with Ontario’s manufacturing sales down 0.8 per cent, to $21.6 billion. The Ontario decrease reflected a 3.2 per cent drop in the auto assembly industry, and a 5.9 per cent drop in petroleum and coal products.

Alberta, however, saw an increase in sales of 6.3 per cent, to $6.3 billion, with gains in the petroleum and coal products industry, chemicals, and the machinery industry.

New orders increased

In January, new and unfilled orders increased 5.8 per cent to $69 billion, mostly in durable goods. These represent the backlog of orders that will become future sales. Most of the gain was attributable to increases in the aerospace product and parts industry, where unfilled orders rose 10 per cent to a record high of $39.6 billion. The January gain was the fourth consecutive monthly increase. Since September 2012, unfilled orders in the aerospace industry have advanced 26.2 per cent. Since 1997, the aerospace industry has been the largest contributor to unfilled orders among all manufacturing industries, accounting for 73.5 per cent of the unfilled orders in the transportation equipment industry.

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Unfilled orders were also up (2.6 per cent) in the machinery industry. The gain followed seven months of declines. Fabricated metal products and computer and electronic products also had sizable numbers of unfilled orders.

Statistics Canada states that the current upward trend in unfilled orders shows parallels with a decline/rise pattern seen following the economic downturns in 2001 and in 2008. In both cases, for a period of about a year unfilled orders remained low, before beginning to climb again, reaching the previous high after about 38 months. Statistics Canada notes that in the present cycle, 38 months have passed since the low point of the cycle was reached in November, 2009.

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