The storyline on manufacturing sales in Canada through 2015 has been dominated by activity in two sectors: auto production and petroleum refining. While low oil prices have decreased the value of petroleum sales throughout the year, the impact has been generally offset by strength in the auto sector. Shipments of motor vehicles and parts had increased by more than 23 per cent from February to August.
September, however, was a different story as both auto producers and petroleum refiners saw sales fall, dragging down the overall numbers for manufacturing in Canada. Sales of motor vehicles and parts were down 7.0 per cent compared to August as production began to wind down in advance of planned facility closures. Refinery output fell by about the same rate. As a result, overall manufacturing sales were down 1.5 per cent in September, falling to $51.1 billion for the month – their lowest level since May.
Through nine months, Canadian manufacturing sales are 1.6 per cent lower compared to the same period in 2014. The goods news, however, is that much of this year-to-date decline can be pinned on the value of refinery output. When petroleum is removed from the equation, Canadian manufacturing sales are actually 2.6 per cent higher so far in 2015 compared to last year.
While the auto sector and refining were the main drivers behind September’s lower sales numbers, there was, in fact, weakness across nearly all major manufacturing sub-sectors. In fact, the only two industry sectors to see positive growth in September were machinery and primary metals. Machinery producers saw sales increase by 9.6 per cent – a rebound from a similarly large decrease in August. Overall machinery sales have been flat through much of the year. The story was the same in primary metals, where sales were up 4.4 per cent in September, helping to offset a combined 5.3 per cent decrease in sales over the previous two months.
After leading the country in manufacturing sales growth for several months, there was an abrupt reversal of fortunes in Ontario. Lower automobile and parts shipments pushed monthly sales down 2.5 per cent compared to August, effectively erasing three months’ worth of gains. Ontario alone accounted for nearly 83 per cent of the decline in sales nation-wide.
Ontario was not alone, however, as Saskatchewan, Alberta and Quebec all posted sharply lower sales as well. In the case of Quebec, sales were down 0.9 per cent as gains in primary metals and food processing were not enough to counter losses in aerospace, chemicals, paper and wood products. Saskatchewan saw a decline of 1.7 per cent in September because of lower sales in machinery and fabricated metals. Finally, Alberta’s 1.4 per cent drop in sales was entirely in petroleum refining. There was otherwise good news in Alberta’s struggling manufacturing sector as sales of machinery, primary and fabricated metals, and transportation equipment were all higher.
While the story was bleak in those four provinces, manufacturers in the remaining six had a relatively good month in September. Sales in PEI and Newfoundland and Labrador were up 4.2 per cent and 5.2 per cent, respectively, to lead the country. New Brunswick and Manitoba also had strong months, while there were small increases in Nova Scotia and BC.