Manufacturing Sales

Manufacturing Sales

March 2024

Manufacturing Sales Fall to Lowest Level in Over Two Years

HIGHLIGHTS

  • Manufacturing sales fell 2.1% to $69.9 billion in March, the lowest level since February 2022.
  • The decrease was widespread, spanning 15 of 20 subsectors, with petroleum and coal products and motor vehicles and parts decreasing the most.
  • Regionally, sales were down in 8 of 10 provinces, led by Ontario and Alberta.
  • The inventory-to-sales ratio increased from 1.69 in February to 1.73 in March.
  • Forward-looking indicators were discouraging, with unfilled orders and new orders down 0.8% and 4.7%, respectively.
  • The capacity utilization rate edged down from 78.3% in February to 78.0% in March.
  • Canadian factory sales have decreased by 3.1% over the past year, impacted by several factors including high interest rates that have dampened domestic and global demand, and retooling at assembly plants that has curtailed auto production.

FACTORY SALES DOWN 2.1% IN MARCH

Manufacturing sales fell 2.1% to $69.9 billion in March, the lowest level since February 2022. Sales in constant dollars, which closely track real manufacturing GDP, were down 2.0% during the month, following three months of little change.

Canadian factory sales have decreased by 3.1% over the past year, impacted by several factors including high interest rates that have dampened domestic and global demand, and retooling at assembly plants that has curtailed auto production.

SALES DECREASE BROAD-BASED ACROSS INDUSTRIES

The decrease in sales in March was widespread, spanning 15 of 20 industries. Sales of petroleum and coal products fell the most, down 8.0% to $8.0 billion. The decline was entirely due to lower volumes, as prices of refined petroleum energy products increased for the second consecutive month.

At the same time, sales of motor vehicles and parts declined 7.0% to $7.7 billion, the sixth decline in eight months. Statistics Canada attributed the recent weakness to ongoing retooling at several major auto assembly plants in Ontario.

On the bright side, sales of machinery rose 2.9% to $4.5 billion in March, the first increase in four months. All seven subsectors were up, with the commercial and service industry machinery contributing the most to the growth.

ONTARIO AND ALBERTA DRIVE DECLINES

Regionally, manufacturing sales were down in 8 of 10 provinces in March. Sales in Ontario declined 2.4% to $30.7 billion, the lowest level since September 2022. The decline was largely driven by lower sales of motor vehicles.

In Alberta, factory sales fell 5.3% to $8.3 billion in March, mainly on lower sales in the petroleum and coal product and chemical subsectors. Hi Sales in the province have decreased in three of the past four months.

On a positive note, sales in Manitoba climbed 1.4% to $2.3 billion in March, as higher sales of chemicals more than offset lower sales of transportation equipment. This was the third straight monthly advance.

INVENTORIES FLAT

After falling for three months in a row, total inventories were largely unchanged at $121.0 billion in March. Inventories of aerospace products and parts recorded the biggest gain, while inventories of computer and electronic products posted the steepest loss. As a result, the inventory-to-sales ratio rose from 1.69 in February to 1.73 in March. This ratio represents the number of months it would take to completely clear inventories assuming sales remain at their current level.

FORWARD-LOOKING INDICATORS DISCOURAGING

Forward-looking indictors were discouraging. The total value of unfilled orders fell 0.8% to $104.8 billion in March, the first decline in four months. Lower unfilled orders of railroad rolling stock contributed the most to the decline.

Meanwhile, new orders plunged 4.7% to $69.0 billion, the lowest level since January 2022. New orders of aerospace products and parts, a notoriously volatile category, were down 13.2%.

CAPACITY UTILIZATION RATE DECREASES

Finally, the manufacturing sector’s capacity utilization rate edged down from 78.3% in February to 78.0% in March. The most notable declines were recorded in the petroleum and coal, chemical, and fabricated metal product industries, while the most significant gain was observed in the wood product sector.