Sales of manufacturing industry declines for second month

Ottawa, ON — The manufacturing industry in Canada has been on a decline for two consecutive months. In May, it reported $57.9 billion worth of sales, which is a decline of 0.6 per cent. The machinery, chemical and fabricated metal industries were mainly responsible for the decline, reports Statistics Canada as part of their monthly survey of manufacturing.

Machinery manufacturing posted record-high sales in April, however, for the month of May, sales declined 16.9 per cent to $3.1 billion. This was mainly due to lower sales in agricultural, construction, and mining machinery.

The wood product industry marked another record month of sales, rising 6.1 per cent to $5.4 billion. Higher prices were likely responsible for the gain as sales in constant dollars decreased by 4.7 per cent. While the total value of building permits issued in Canada fell 14.8 per cent, exports of forestry products and building and packaging materials rose 8.9 per cent.

The industrial product price index reported an increase of 2.7 per cent in May, on higher prices for lumber and other wood product (all up 17.9 per cent). Prices of raw materials purchased by manufacturers rose 3.2 per cent.

Several Canadian machinery manufacturers indicated that the lack of raw materials (including microchips) and delay in shipments affected their production in May. The microchip shortage affects the mechanical trades as smart technology requires a microchip to effectively communicate.

Sales in the fabricated metal product industry fell 1.8 per cent $3.6 billion with lowers sales of boilers, tanks, and shipping containers along with coating, engraving, cold and heat treating, and allied products were responsible for the decline.

Inventory back up

Total inventories rose 0.7 per cent to $90.3 billion in May on higher inventories of chemical (up 3.8 per cent), petroleum (up 4.3 per cent), and wood (up 3.7 per cent). The inventory to sales ratio edged up from 1.54 in April to 1.56 in May. The ratio measures the time (in months) that it would take to exhaust inventories if sales were to remain at their current level.