Photo credit: Mint_Images
OTTAWA – In May 2024, Canadian manufacturing sales increased by 0.4% to reach $71.4 billion, following a 1.4% rise in April. The growth was driven by higher production in the aerospace product and parts industry (+11.2%), and increases in the food (+1.4%) and paper (+5.5%) product subsectors. Conversely, motor vehicles (-4.2%) and petroleum and coal products (-2.2%) saw the largest declines. Despite this monthly increase, overall sales were down 1.8% compared to the previous year.
Sales in constant dollars also grew by 0.4% in May, even though the Industrial Product Price Index remained unchanged and the Raw Materials Price Index fell by 1.0%.
Significant Growth in Aerospace Production
Aerospace product and parts production surged by 11.2% in May to $2.7 billion, marking the highest level on record. This increase follows a 6.1% decline in April and is largely attributed to the post-pandemic boom in the commercial and business aircraft markets.
Food product sales rose by 1.4% to $13.0 billion, the third-highest level recorded, with notable gains in seafood (+36.2%), meat (+5.7%), and bakery and tortilla manufacturing (+8.9%). Seasonal demand helped boost food sales in constant dollars by 1.1%.
Motor vehicle sales fell by 4.2% to $4.6 billion due to retooling in an Ontario auto assembly plant. This transition to electric vehicle production also led to a 1.6% decrease in motor vehicle parts sales. However, motor vehicle exports increased by 3.8%, driven by higher light truck exports to the United States. Year-over-year, motor vehicle sales declined by 12.5%.
Provincial Sales Overview
Manufacturing sales increased in six provinces in May, with Quebec (+1.2%) and Ontario (+0.5%) leading the way, while Saskatchewan experienced the largest drop (-13.1%).
In Quebec, sales rose for the fourth consecutive month, reaching $18.6 billion, driven by a significant rise in aerospace product and parts production (+11.7%) and non-ferrous metals sales (+10.2%). Montreal saw a 1.7% sales increase, contributing to a 6.0% year-over-year rise in Quebec.
Ontario’s sales grew to $31.3 billion, mainly due to higher food (+3.7%) and plastics and rubber (+5.7%) product sales, despite a decline in pharmaceutical and medicine products. In Toronto, sales fell by 3.5% to $12.2 billion, primarily due to lower sales of chemicals (-17.7%) and motor vehicles (-15.8%).
Saskatchewan’s sales dropped by 13.1% to $1.8 billion, driven by a 15.5% decrease in non-durable goods sales. This resulted in a 15.5% year-over-year decline in the province.
Inventory and Orders Update
Total inventories edged up by 0.2% to $121.2 billion in May, with increases in 10 of 21 subsectors. Goods in process rose by 1.3%, while finished products declined by 0.3% and raw materials remained unchanged. Higher inventories in transportation equipment (+2.2%), computers and electronics (+5.4%), and wood products (+2.2%) were offset by declines in chemical products (-2.1%) and primary metals (-1.4%). Year-over-year, total inventories were down by 1.4%.
The inventory-to-sales ratio remained steady at 1.70, indicating the time required to deplete inventories if sales continue at the current pace.
Unfilled orders increased by 0.8% to $105.5 billion, driven by higher orders in other transportation equipment (+16.6%) and machinery (+2.9%).
Capacity Utilization
The manufacturing sector’s capacity utilization rate rose from 78.4% in April to 80.4% in May, due to higher production, particularly in the chemical (+8.2 percentage points), petroleum and coal product (+7.0 percentage points), and plastics and rubber (+5.3 percentage points) subsectors. The rate declined by 2.6 percentage points in the transportation equipment subsector.
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Business Examiner Staff
