Manufacturing sales fell 0.9% to $71.6 billion in July, the third consecutive monthly decline, on lower sales in 12 of 21 industries, led by the primary metal (-9.9%), petroleum and coal product (-5.3%), and furniture and related products (-11.2%) industries. Meanwhile, sales of food (+2.5%), motor vehicle parts (+10.7%), and paper products (+8.1%) industries increased the most. Sales in constant dollars increased 0.6% in July, the second consecutive monthly increase, while the Industrial Product Price Index declined 2.1% for the month.

Record-high inventory levels continue
Total inventory levels increased 1.2% to $118.1 billion in July, on higher inventories in 14 of 21 industries, led by the primary metal (+2.3%), machinery (+2.1%), and petroleum and coal (+2.4%) industries. The gains were partly offset by a 1.4% decline in inventories of chemical products. Higher prices of materials have been the main contributor to the increase in inventory levels since the beginning of the COVID-19 pandemic. In current dollars, total inventories rose 35.3% and raw materials rose 48.2% in July compared with the pre-pandemic level in February 2020, while they were up only 6.9% and 10.0% in real terms during the same period.

The inventory-to-sales ratio increased from 1.61 in June to 1.65 in July. This ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders remain unchanged
The total value of unfilled orders was unchanged at $106.3 billion in July. Higher unfilled orders in the transportation equipment industry (+1.4%) were partially offset by declines of unfilled orders in the computer and electronic (-3.8%) and machinery (-2.0%) industries. Total unfilled orders were up 20.1% on a year-over-year basis in July.

The total value of new orders fell 5.3% to $71.6 billion in July, largely on declines of new orders of aerospace products and parts (-31.5%) and motor vehicles (-15.3%). The declines were partially offset by higher new orders in the motor vehicle part industry (+15.2%).

Capacity utilization rate decreases
The capacity utilization rate (not seasonally adjusted) for the total manufacturing sector decreased from 79.6% in June to 76.9% in July, on lower production. The capacity utilization rates fell in 18 of 21 industries in July and was noticeable in the wood product (-7.5 percentage points), machinery (-7.2 percentage points), primary metal (-6.5 percentage points) and chemical product (-6.4 percentage points) industries. The declines were partially offset by a higher capacity utilization rate in the petroleum and coal product industry (+5.3 percentage points).

Source: StatsCan