Record sales numbers to begin 2016

Manufacturing Sales Analysis – January 2016

Canada’s mini-boom in manufacturing continued in January, as businesses set a new all-time monthly sales record to start the year. Manufacturing output rose 2.3 per cent compared to December, reaching $53.1 billion, eclipsing the previous high set back in July 2008. Sales in January were 5.6 per cent higher than they were a year ago.

Sales growth was strong across a range of manufacturing industries, but nowhere more so than in motor vehicles and parts production. Sales of those goods have been booming in recent months; they were up 7.7 per cent in January and are 29 per cent higher than they were 12 months earlier. In fact, automobile and parts production in Canada is now at its highest level in nearly 16 years.

Food product manufacturers also enjoyed an excellent January. Sales in that industry were up 4.6 per cent over December, hitting a new record high ($8.4 billion) for the second time in three months. Together, food and automobile and parts producers accounted for close to 88 per cent of total manufacturing sales growth in January.

The news was not good across the board, however. Once again, coal and petroleum product output declined as falling oil prices in January weighed on output values. Sales in that industry were down 5.9 per cent for the month. The aerospace and wood products industries also saw lower sales to begin the year.

For the sector as a whole, not only did January produce record sales numbers, but forward-looking indicators point to additional sales growth ahead. New, non-aerospace orders were up 3.8 per cent to reach their highest level in 12 months. Those new sales contracts also contributed to an uptick in unfilled orders. Meanwhile, manufacturing inventory levels remained steady.

Looking at the provincial numbers, there was solid growth in most provinces. Sales in New Brunswick jumped 8.8 per cent as the Irving oil refinery experienced its first full month of production since partially closing for maintenance and upgrades last fall. PEI (4.6 per cent) and Manitoba (3.8 per cent) both saw strong monthly gains as well.

The big story, however, continues to be the renaissance of manufacturing in Ontario. Led by the booming auto sector, output in that province was up 3.8 per cent in January – adding more than $1 billion to total monthly sales and setting a new all-time record for the province. The new high water mark of $26.4 billion is solidly above the previous record of $26.0 billion, set 11 years ago to the month.

On the negative side, Alberta manufacturers continue to see dark days. Manufacturing output in Alberta fell 3.8 per cent, driven lower by petroleum refining and by the struggling energy sector supply chain. Making matters worse, the energy sector’s struggles are beginning to filter through to the rest of Alberta’s manufacturing sector. Sales of food products, wood products, non-metallic minerals and furniture were all down in January.