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Manufacturing Sales Report – Oct 2015

Manufacturing sales were down for the third consecutive month in October, falling by 1.1 per cent to reach $50.4 billion. While sales figures were tepid across most industrial sectors, October’s decline was largely the result of two main factors: a scheduled maintenance shutdown at Canada’s largest petroleum refinery in New Brunswick; and sharply lower aerospace deliveries from Quebec. Aside from those two industries, Canada’s overall manufacturing performance was essentially flat for the month, falling by less than 0.2 per cent.

manufacturing sales graphic

With ten months in the books, Canadian manufacturers are now certainly looking at a setback from 2014’s record sales numbers. Through October, manufacturing sales are down nearly 2.0 per cent compared to the first ten months of last year. The good news, however, is that those losses can be pinned almost entirely on the impact of falling oil prices in 2015. Excluding the petroleum refining industry, total sales are 2.2 per cent higher than they were last year.

manufacturing sales by month graphic

As noted above, a major factor behind October’s lower sales figures was a planned $200-million maintenance and upgrade project to the Irving oil refinery in New Brunswick that began in September. Production at the Saint John facility will be halved for the duration of the two-month project. As a result, November’s sales figures are also poised to be below 2014 levels; not only will the volume of refinery output be lower, but a fresh drop in crude oil prices will push petroleum sales figures down even further.

refinery output graphic

Although refinery production was the largest factor behind October’s lower sales figures, shipments were down in most other industrial sectors as well. In particular, the aerospace sector saw a decline of more than 10 per cent in monthly sales (down $189 million) compared to September. October was also a bad month for producers of machinery and primary metals, where sales declined by 4.6 per cent and 2.4 per cent, respectively.

sector manufacturing sales graphic

The lone bright spot in October was the auto sector which recovered some of the losses from a poor showing in September. After strong growth through most of 2015, sales fell abruptly in September, dropping by nearly 6.6 per cent in a single month. In October, auto producers recovered some of those losses, as sales bounced back by 2.5 per cent. Although monthly sales of motor vehicles and parts remain below their August peak, the industry has had an excellent year so far in 2015, with total sales through October 7.3 per cent higher compared to the January-October period in 2014.

provincial manufacturing sales chart

As already indicated, New Brunswick and Quebec were the main drivers behind October’s decline in manufacturing activity. Sales in New Brunswick were down nearly 24 per cent compared to September ($347 million) – a testament to the dominance of refining in the composition of that province’s manufacturing sector. In Quebec, overall sales fell by 2.1 per cent, translating into a $253-million decline in shipments from that province. Alberta manufacturers also had another weak month in October. Sales from that province were down 1.9 per cent ($104 million), driven down by the chemical products and machinery industries.

Softening the impact of those losses on the national manufacturing sales picture was an increase in sales from Ontario – driven higher by the rebound in auto production, described above – as well as modest increases in Saskatchewan, Newfoundland and Labrador, and PEI.

Looking at the year to date in 2015, Manitoba has quietly become Canada’s growth leader in manufacturing activity. Sales from that province since January are up 5.8 per cent compared to the same period last year. Nova Scotia has also enjoyed similar gains. At the other end of the spectrum, Saskatchewan and Alberta are still facing double-digit losses compared to last year.

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