Manufacturing sales rose for a second consecutive month in November, rising 2.6% to $63.1 billion on higher sales in 18 of 21 industries, led by the primary metal, petroleum and coal product, non-metallic mineral, and food product industries. Sales in constant dollars increased 1.9% in November, indicating a higher volume of goods sold. The Industrial Product Price Index increased 0.8% month over month in November. 

Despite the gains observed for November, supply chain issues continued to impact manufacturing production in many industries including transportation, chemical, and food. Moreover, floods in British Columbia further exacerbated the situation.

Flooding in British Columbia impacts manufacturing

Based on respondent feedback, the flooding in British Columbia disrupted supply chains across Western Canada and had moderate impacts on manufacturing activities. At the national level, the floods impacted 28.1% of manufacturing plants in November, mainly through disruptions in transportation (21.5%) and shortages of raw materials (13.7%). Delays in shipments of products or raw materials, increased logistics costs, and limited access to sites were frequently mentioned by respondents. The lost sales due to the floods were estimated at $372.1 million in November, while the largest impacts were in the wood (-$90.7 million) and paper (-$60.0 million) product industries.

Primary metals lead robust sales in Quebec

Manufacturing sales increased in seven provinces in November, led by Quebec, Alberta, and Ontario. Meanwhile, Saskatchewan posted the largest decline.

In Quebec, sales increased 6.7% to $16.5 billion in November, on widespread gains across 17 of 21 industries, led by the primary metal and chemical industries. On a year-over-year basis, total sales in Quebec rose 22.4%.

Sales in Alberta increased 4.2% to $7.6 billion in November, on higher sales of petroleum and coal products (+10.4%) and food (+2.9%). The gain in the petroleum and coal industry was partially attributed to the resumption of production in a major refinery in November following maintenance stoppages that occurred in October. Sales of machinery posted the largest decrease, down 6.6% to $447.1 million in November. On a year-over-year basis, total sales in Alberta rose 35.9%.

Sales in Ontario increased 0.9% to $27.5 billion in November, on higher sales of motor vehicle parts (+5.3%), food (+2.0%) and non-metallic minerals (+12.9%). The gains were partially offset by a 5.8% decline in sales of machinery.

Sales in Saskatchewan decreased 3.8% to $1.7 billion in November on lower sales of machinery (-15.7%) and food (-4.4%). Declines in the total harvest of canola seeds in 2021 due to the severe and widespread drought conditions during the growing season impacted oil seed manufacturing in Saskatchewan and resulted in a surge in prices of canola oil products. Despite the decline in November, total sales in Saskatchewan were 45.6% higher compared with the same month a year earlier.

Record high inventory levels continue

Total inventories increased 1.2% to a record high $100.8 billion in November, on higher inventories of petroleum and coal (+6.9%) and chemicals (+4.3%). Higher prices of raw materials, in addition to manufacturers stocking up on raw material inventories to mitigate supply chain disruptions, were responsible for the recent gains in inventory levels. Year over year, total inventories rose 16.1%.

The inventory-to-sales ratio decreased from 1.62 in October to 1.60 in November. The ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Unfilled orders rise

Total value of unfilled orders rose 0.4% to $95.8 billion in November, mostly due to higher unfilled orders of machinery (+2.7%) and computers and electronics (+3.2%). The gains were partially offset by lower unfulfilled orders of ship and boat building. Year over year, unfilled orders were up 7.7%.

The total value of new orders increased 3.0% to $63.4 billion in November, mainly attributable to higher new orders of transportation equipment (+4.7%) and primary metals (+5.9%).

Capacity utilization rate increases on higher production

The capacity utilization rate (not seasonally adjusted) for the total manufacturing sector increased from 76.4% in October to 78.8% in November on higher production.

The capacity utilization rate rose in 13 of 21 industries in November, but the gains were more noticeable in the petroleum and coal (+11.2%), transportation equipment (+7.0%), and computer and electronic (+3.5%) product industries. The capacity utilization rate for chemical manufacturing fell 2.3%.

Source: Statistics Canada