According to Statistics Canada, manufacturing sales declined 3.0 percent to $58.5 billion in September, the lowest level since May 2021. Sales decreased in 12 of 21 industries, with most of the decline attributable to lower sales of motor vehicles due to the shortage of semiconductors. The decrease was partially offset by higher sales in the petroleum and coal industry.
Total inventories increased 1.3 percent to a record high $97.6 billion in September, driven by higher inventories of primary metal (+3.6 percent), fabricated metal (+3.7 percent) and wood (+3.6 percent). Up until 2021, higher prices for raw materials contributed to the gains in total inventories. Year over year, total inventories rose 12.7 percent. Raw materials are the largest component of manufacturing inventories followed by finished products. The share of raw materials in total inventories has been rising since the COVID-19 pandemic, mainly due to higher prices.
The inventory-to-sales ratio increased from 1.60 in August to 1.67 in September. The ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Total value of unfilled orders edged up 0.6 percent to $94.7 billion in September, mostly due to higher unfilled orders of machinery (+5.8 percent) and fabricated metal (+2.6 percent) products. Year over year, unfilled orders were down 1.3 percent.
The total value of new orders decreased 3.0 percent to $59.1 billion in September, mainly attributable to lower new orders of transportation equipment.
The capacity utilization rate (not seasonally adjusted) for the total manufacturing sector decreased from 77.1 percent in August to 74.6 percent in September, on lower production.
The capacity utilization rate fell in 10 of 21 industries September, driven by lower production in the transportation equipment (-15.3 percentage points), petroleum and coal (-3.5 percentage points), primary metal (-2.8 percentage points) and chemical (-4.0 percentage points) industries. The capacity utilization rate in food manufacturing increased 1.5 percentage points.