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Falling loonie fails to lift manufacturing sales in November: StatsCan

Published by Brad Fougere on January 20, 2015

In spite of the expected benefits of a lower Canadian dollar, manufacturing sales fell 1.4 per cent in November, marking the fourth decline in sales in the past five months.

Since July, monthly sales have fallen by 4.0 per cent – from $53.7 billion to $51.5 billion. Over that same period, the Canadian dollar has decreased in value from 93.1 cents to 86.7 cents US.

It may be that, for many manufacturers, the exchange rate does not have the same impact on operations as it once did. While a lower dollar makes Canadian products cheaper in foreign markets, it also raises the cost of importing the materials needed to make those goods. As Canadian manufacturers become increasingly integrated into global value chains, the exchange rate benefits on the one side of the ledger may be largely offset by the costs on the other. However, most likely, it could be that the impact of a lower dollar has not yet been reflected in the available data.

Even though the lower dollar has so far failed to boost manufacturing sales, the sector remains on pace for a solid annual performance in 2014.  From January through November, total sales are up 5.2 per cent compared to the same period last year.

It is also worth noting that, in spite of larger declines in October and November, Canadian manufacturers continued to outperform their US counterparts in 2014. Through November, US manufacturing shipments are growing at just half the rate (2.6 per cent) of Canadian sales.

November’s drop in sales in Canada was spread across a range of industries, but felt most acutely in the motor vehicles and parts sector. Sales of vehicles and parts fell 3.5 per cent compared to October (a drop of $259 million), accounting for a full third of the overall decline in manufacturing sales that month. Sales were also markedly lower for chemicals (3.6 per cent) and primary metals producers (3.0 per cent).

At the other end of the spectrum, the aerospace sector enjoyed a strong recovery in November with sales increasing by 9.1 per cent. Machinery and fabricated metals were the only other sectors to see positive sales growth in November.

Sales were down in most provinces, with the largest dollar-value declines in Ontario ($510 million) and Quebec ($277 million). However, on a percentage basis, the drop in sales was most severe in Alberta, where a slowdown in the oil sector contributed to a 3.8 per cent drop in sales activity in November.

By contrast, New Brunswick and Newfoundland and Labrador posted strong monthly gains in November. In both cases, the growth stemmed from a resumption in refinery output following earlier shutdowns. Sales in Newfoundland and Labrador were up 26.2 percent compared to October, and were 16.6 per cent higher in New Brunswick. Saskatchewan was the only other province to register positive growth in manufacturing sales that month (2.2 per cent).

Found in: Stats Canada

National Office

Alberta British Columbia
Manitoba New Brunswick
Newfoundland & Labrador Nova Scotia
Ontario Québec
Prince Edward Island Saskatchewan