Manufacturing Sales Analysis – April 2016

Oil price recovery helps manufacturing advance in April

After enduring two months of steep declines, Canadian manufacturing sales enjoyed a turnaround in April. Overall sales were up 1.0 per cent compared to March (reaching $50.4 billion), offsetting a similar-sized decline the previous month. April's increase was led by refined petroleum production, where output values are being lifted by a recovery in crude oil prices. 

April's manufacturing sales report also had some positive signals for future production activity. New orders for manufactured goods jumped 7.9 per cent, led by an uptick in aerospace requisitions. However, non-aerospace orders were also up, reaching their highest level since January. On top of that, manufacturing inventories continued to trend downward in April, as businesses drew down on their stockpile of warehoused goods. The combination of higher new orders and lower inventory levels could point to additional production activity in the coming months.

sales in canada

The negative side to April's manufacturing sales report is that growth was effectively limited to a few specific areas. Of the eleven major manufacturing industries in Canada, only four recorded higher sales that month, while the rest were lower.

Leading the way on the positive side was refined petroleum, where sales values are benefiting from an uptick in crude oil prices. The price of a barrel of West Texas Intermediate (WTI) jumped from about US$30 per barrel in February to just under US$41 per barrel in April. That, in turn, has a direct impact on the value (and price) of gasoline and other refined petroleum products. Oil prices averaged US$47 in May, suggesting that refinery output values will also be higher in May, notwithstanding the impact of supply disruptions stemming from the Ft. McMurray-area forest fires.

Outside of petroleum refining, the biggest gains came in primary metals production and in aerospace. Primary metals producers saw sales jump by 3.9 per cent, compared to March, largely offsetting a sharp drop in production a month earlier. Similarly, aerospace output rose 6.3 per cent in April, recovering most of the 8.0 per cent decline in March.

Some of Canada's smaller manufacturing industries also enjoyed a solid month in April. In particular, rail rolling stock and shipbuilding both saw a tremendous spike in activity. Shipbuilding sales were up 29.3 per cent to reach their highest level since December. Meanwhile, railcar production hit a nine-year high in April, as total output jumped 39.5 per cent.

On the negative side, production of plastics and rubber products was lower in April, declining by 2.1 per cent compared to March. Sales of wood products (-1.7 per cent), fabricated metals (-1.0 per cent) and machinery (-0.9 per cent) were also down for the month.

sales by industry

At the provincial level, the increase in manufacturing sales was led by New Brunswick and Alberta - home to most of Canada's refining capacity. New Brunswick's manufacturing sales were up 7.5 per cent, while Alberta saw production values increase by 3.5 per cent. Manitoba's manufacturers had a solid month as well, as output of food products, machinery, fabricated metals and aerospace parts were all higher. For their part, Canada's two largest manufacturing provinces also saw higher output levels; sales in Quebec and Ontario were up by 1.4 per cent and 0.4 per cent, respectively. On the negative side, sales were down in BC and in Atlantic Canada outside New Brunswick. 

Sales by Prov 

On a year-to-date basis, however, it is Ontario where the largest manufacturing gains are taking place. Although sales are down since January, overall manufacturing activity through the first four months of 2016 is 8.2 per cent higher compared to the same period last year.

orders ride in Apr 

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