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Eleven of 21 industries up as manufacturing sales rise in August: StatsCan


October 18, 2011
By The Canadian Press

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Canadian manufacturers saw a surprising jump in sales during the month of August as they continued to recover from a severe beating taken during the worst months of the recession.

Manufacturing sales rose 1.4 percent to $47.6 billion in August, the highest level since October 2008, Statistics Canada reported, with gains concentrated in the transportation equipment, food, and petroleum and coal product industries.

“Market expectations were for a smaller 0.5 percent rise going into the report,” Royal Bank economist Nathan Janzen wrote in a report to clients, adding that while the report was “encouraging,” it was also “relatively narrowly based” due to a 47.8 percent increase in the aerospace sector.

“Sales in this sector typically reflect production that occurs over a number of months, which limits the flow through to monthly GDP growth. However, providing some offset, weakness in motor vehicle sales in August is also unlikely to be reflected in the manufacturing component of GDP.”

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Constant-dollar manufacturing sales were up 1.1 percent, their second straight increase. Higher sales were reported in 11 of 21 industries, representing 70 percent of total manufacturing.

“This month’s results extend a positive sales trend, but keep in mind that the recent two-month growth sequence merely makes up for ground lost in the second quarter of the year,” said TD Bank economist Jacques Marcil.

“The relatively low level of the inventory-to-sale ratio points to continued growth in the coming months,” Marcil said.

“With about one-third of our manufacturing sales going to the U.S., we are not expecting breakneck growth for the rest of the year. Signs point to improved auto industry shipments stateside, but these are vulnerable to buyer confidence, which remains weak. At the same time, the recent softness of the Canadian dollar will provide offsetting support.”

Quebec, Newfoundland and Labrador, and Ontario led the provincial increases.

Sales of transportation equipment rose seven percent after a 3.5 percent gain in July. Food industry sales increased 3.9 percent, their first increase in four months. Sales in petroleum and coal products rose 2.7 percent to $6.4 billion.

The gains were somewhat offset by declines in fabricated metal product (down seven percent) and primary metal (down 2.7 percent).