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Manufacturing Sales Report – June 2015

Manufacturing sales rose for the second straight month in June, led by strong gains in motor vehicles and chemicals production. Building upon a modest 0.2 per cent increase in May, overall sales were up 1.2 per cent in June to reach $50.8 billion.


After falling steadily from last July to February, manufacturing activity has stabilized. Sales have risen in three of the past four months and, although they remain well below their levels from a year ago, the downward trend appears to be halting.

Even so, because of the sharp drop in sales last fall, the year-over-year numbers in manufacturing are sobering and will continue to look weak through the remainder of the year. June’s sales were 3.1 per cent lower than a year ago, and sales in the first half of 2015 are down 1.5 per cent compared to the same period last year.

Most of Canada’s major manufacturing industries posted gains in June. Leading the way were chemicals producers, who saw sales increase by 5.4 per cent, making up for a comparable loss in May. Motor vehicles and parts production also posted a healthy 2.6 per cent gain for the month. In fact, while a number of industries have struggled since last summer, motor vehicles and parts producers have performed well – in spite of temporary plant shutdowns and news of lost investment opportunities. While overall manufacturing sales fall 1.6 per cent in the first half of 2015, motor vehicles and parts producers posted a strong gain of 5.6 per cent.


A number of Canada’s smaller manufacturing industries also performed well in June. Sales of computers and electronics, electrical equipment, rail stock, and printed goods were all up markedly that month.


Overall sales growth would have been stronger had it not been for significant weakness in two of Canada’s largest manufacturing industries – petroleum refining and fabricated steel production. The decrease in the value of petroleum products was entirely expected given the sharp drop in oil prices in June; the value of refinery output was down 1.2 per cent for the month and for the first half of 2015 remains more than 27 per cent lower than a year ago. For its part, fabricated steel production fell sharply in June posting an 8.2 decline over May. Much of that decline can be attributed to lower sales of boilers, tanks and shipping containers. At total monthly sales of $2.6 billion, fabricated steel producers had their worst month since May 2011.


Across Canada, sales were up in most provinces, although Quebec accounted for the lion’s share of the gains.  A full 58 per cent of Canada’s overall sales growth in June came from Quebec. Sales in that province were up $343 million – a 2.9 per cent increase over May. For the second month in a row, Newfoundland and Labrador posted solid growth, although sales through the first half of the year are 10 per cent below last year’s levels. Saskatchewan also had a strong rebound month in June, while Alberta manufacturers had their best month (in terms of sales growth) in a year. For its part, Ontario posted a modest 0.4 per cent increase after two months of decline.


Although growth has slowed in recent months, BC is nevertheless emerging as the runaway leader in sales growth across Canada. While national sales through June are down 1.6 percent compared to the first six months in 2014, shipments from BC are up 4.5 per cent. The next best performer is Nova Scotia, where sales are 2.5 per cent higher.  

 

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