According to Statistics Canada, manufacturing sales fell 0.6 percent to $57.9 billion in May, the second consecutive monthly decline. The machinery, chemical and fabricated metal industries were mainly responsible for the decline. Sales of wood product manufacturing increased the most, followed by primary metal. Year-over-year, total sales were up 42.6 percent.
Following record high sales in April, sales of machinery declined 16.9 percent to $3.1 billion in May, mainly due to lower sales of agricultural, construction and mining machinery. On a year-over-year basis, sales were still up 25.7 percent. A number of machinery manufacturers indicated that the lack of raw materials (including microchips) and delay in shipments affected their production in May. As a result, the industry's capacity utilization rate fell 4.1 percentage points.
Sales in the fabricated metal product industry fell 1.8 percent to $3.6 billion in May. Lower sales of boiler, tank and shipping containers along with coating, engraving, cold and heat treating and allied products were responsible for the decline.
Total inventories rose 0.7 percent to $90.3 billion in May on higher inventories of chemical (+3.8 percent), petroleum (+4.3 percent) and wood (+3.7 percent) products. The transportation equipment industry posted the largest decline in inventories (-2.8 percent). Total inventories rose 3.9 percent year over year.
The inventory-to-sales ratio edged up from 1.54 in April to 1.56 in May. The ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Following a 2.0 percent decrease in April, unfilled orders decreased 4.1 percent to $87.1 billion in May, led by an 11.3 percent decline in unfilled orders of aerospace products. Many aerospace manufacturers have been affected by the uncertainty surrounding the global economy and travel restrictions caused by the pandemic, which has resulted in several order cancellations since 2020.
Total value of new orders fell 4.0 percent to $54.1 billion in May, pulled downward by a decline in new orders of aerospace products and parts.
The capacity utilization rate (seasonally unadjusted) for the total manufacturing sector was unchanged at 77.5 percent in May.
The lower capacity utilization rates in the machinery (-4.1 percentage points), chemical product (-2.1 percentage points) and transportation equipment (-1.1 percentage points) industries were offset by high production capacity rates in the petroleum and coal (+4.5 percentage points) and plastic and rubber product (+2.7 percentage points) industries.