Canadian Manufacturing Sales Retreated In April

Canada’s manufacturing sales retreated 0.8% in April after a 1.9% jump in March. Mostly responsible for the decline were declines in sales of aerospace products (-33.7%) and petroleum & coal products (-4.9%). Other contributors were metallic products (-4.4%), non metallic mineral products (-2.4%), machinery (-2.8%) and computer & electronic products (-2.3%). The decline was limited by a 9% surge in sales of motor vehicles. Sales fell in 13 of 21 industries representing about 45% of the manufacturing sector.

On a regional basis, sales were down in seven provinces out of ten, with New Brunswick and PEI reporting two-digit drops. New orders fell 3.2%, mostly reflecting aerospace products, petroleum & coal products and machinery. Unfilled orders were flat in April, as declines in aerospace products (-0.5%) and other transportation equipment (-3.4%) were offset by advances in metal products (+2.9%), wood products (+2.8%), machinery (+1.1%), computer & electronic products (+2.8%) and electrical products (+3.3%). Inventories rose 1.0% in April, aerospace products (+5.1%) being the largest contributor. The inventory-tosale ratio increased 0.02 to 1.32 in April. In constant dollars, manufacturing sales declined 0.6%.


Opinion: Canadian manufacturing sector is affected by the ongoing economic soft patch in North America (top chart). However, part of the weakness in April can be attributed to temporary shutdowns at some refineries. Looking ahead, prospects are nevertheless not that bad. Indeed, in food, machinery and fabricated metals, unfilled orders have increased lately to record levels. Overall, unfilled orders excluding aircraft are close to a record level (middle chart). Also encouraging is the fact that 36,400 manufacturing jobs were created in May. Even with April’s decline, manufacturing sales contribute slightly to economic growth after one month in Q2 (bottom chart).