According to Statistics Canada, manufacturing sales decreased 2.6 percent to $52.5 billion in July, following a 1.9 percent decline in June. The decrease was primarily the result of lower sales of motor vehicles and motor vehicle parts. Excluding motor vehicles and motor vehicle parts, manufacturing sales increased 0.2 percent.
Sales were down in 9 of 21 industries, representing 57 percent of the manufacturing sector. Sales of durable goods decreased 4.6 percent, while sales of non-durable goods declined 0.2 percent.
In constant dollars, sales were down 1.4 percent in July, indicating a decline in the volume of manufactured goods sold.
Sales in the transportation equipment industry fell 13.8 percent to $9.6 billion in July, for a second consecutive monthly decline. This is the largest monthly decrease since May 2009. The decrease was the result of declines in the motor vehicle (-19.9 percent) and the motor vehicle parts (-11.3 percent) industries. Motor vehicle assembly plants have annual shut downs during the summer months. This year, the shutdowns were longer and more concentrated in the month of July compared with previous years. Changes to vehicle models being manufactured in Canada also contributed to the decline.
Sales of motor vehicle parts closely track production at the motor vehicle assembly plants. In constant dollars, motor vehicle sales were down 17.5 percent, while motor vehicle parts decreased 9.3 percent.
These declines were partially offset by increases in wood products (+2.3 percent), primary metals (+1.9 percent) and non-metallic mineral products (+4.4 percent). Sales in constant dollars for these industries increased 2.1 percent, 4.9 percent and 4.5 percent, respectively, indicating that higher volumes of goods sold were responsible for the gains.
Inventories for the manufacturing sector edged down 0.2 percent to $73.7 billion in July. This was the third consecutive monthly decline. The majority of the decreases came from aerospace product and parts (-2.4 percent), followed by primary metals (-0.9 percent), food (-0.7 percent) and chemicals (-0.6 percent).
The inventory-to-sales ratio increased from 1.37 in June to 1.40 in July. The increase in the ratio reflects the fact that the decline in sales was larger than the decline in inventories. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Unfilled orders fell 1.7 percent to $86.2 billion in July, the third consecutive monthly decline. Most of the decrease was due to a drop in unfilled orders in the aerospace product and parts (-3.9 percent) industry.
These declines were partially offset by an increase in unfilled orders in machinery (+2.9 percent) and fabricated metal products (+1.9 percent).
New orders declined 1.7 percent to $51.1 billion in July. The decrease mostly reflected lower new orders in motor vehicles, and in aerospace product and parts. These declines in July were partially offset by higher new orders in fabricated metal products, and in computer and electronic products.