Manufacturing sales declined 8.0% to $44.2 billion in December 2008

Statscan - The decline reflected almost equal decreases in both volume and price. This was the largest monthly percentage decline since the start of the current series in January 1992.

Constant dollar manufacturing sales, measured in 2002 prices, decreased by 4.4% in December.

All industries but one post decreases

Declines were widespread in December, as sales fell in 20 of 21 manufacturing industries. The printing and related support activities industry recorded the only increase (+0.1%).

Manufacturing sales in the petroleum and coal products industry fell 18.4% to $4.4 billion. Sales have decreased by almost $3.8 billion from the peak of $8.2 billion reached in June 2008. Falling prices largely explain the lower value of sales.

In the motor vehicle industry, sales declined 14.2% to $3.2 billion. Motor vehicle parts manufacturing fell 17.6%, as parts' manufacturers struggled with a sharply reduced demand from the auto assembly plants.

Primary metal manufacturers also reported substantially lower sales, down 14.4% to $3.5 billion. Both falling prices and deteriorating global demand depressed the value of sales.

Sales decline in nine provinces

All provinces, with the exception of Prince Edward Island, posted lower manufacturing sales in December, ranging from a drop of 14.2% in both Nova Scotia and Saskatchewan to a 2.4% decrease in Manitoba.

Ontario's manufacturing sales declined 9.2% to $20.3 billion. Decreases in transportation equipment, petroleum and coal products and primary metals accounted for nearly three-quarters of the overall provincial decline.

Sales in British Columbia decreased 8.7%. The drop in sales reflected declines in the wood products, primary metals and non-metallic mineral products industries.

Alberta's manufacturing sales fell 8.5% in December, on the heels of a 5.7% drop in November. Key industries which were down over the month included petroleum products, chemical products and fabricated metal products.

Manufacturing sales in Quebec dropped by 5.3%, which was attributable to the petroleum and coal products industry and the primary metals industry.

In the Atlantic provinces as a whole, manufacturing sales were down 8.7%, again reflecting the sizeable drop in petroleum product prices.

Following a 0.8% decrease in November, inventory levels dropped another 1.9% to $66.4 billion in December.

Petroleum and coal products (-12.5%), motor vehicles (-11.4%) and motor vehicle parts (-8.4%) manufacturers were among the major contributors to the inventory decline. Specifically, price decreases contributed to the lower value of inventory in the petroleum and coal products industry.

The inventory-to-sales ratio increased to 1.50 in December, a level not seen since October 2001. This nine-point jump was the largest month-to-month change since the start of the current series in 1992, moving the ratio well above its three-year average of 1.31.

The inventory-to-sales ratio is a measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Fewer unfilled orders in December

Unfilled orders declined 2.8% to $68.7 billion in December. Aerospace products and parts orders decreased 3.5% to $37.4 billion, while computer and electronic products were down 3.3% to $4.1 billion. Unfilled orders for railroad rolling stock also declined 3.2% to $2.0 billion.

Excluding the aerospace industry, which comprised approximately half of the total backlog, unfilled orders decreased 1.9% in December.

New orders dropped 12.9% to $42.2 billion in December. New orders in the transportation equipment industry fell by $3.2 billion, representing approximately half the overall decrease.

Manufacturing activity in 2008

Manufacturers posted a 0.5% decline in current dollar sales to $604.5 billion in 2008, the lowest level since 2005.

Through the first half of 2008, high industrial prices lifted manufacturing sales. In constant dollars, the volume of goods manufactured fell a steep 6.6% to $547.2 billion, the third successive annual decline and the lowest level since 2001.

A slight majority of goods-producing industries (12 of 21) reported lower sales (in current dollars). A sharp pull-back in demand for new automobiles and housing contributed to substantial declines in the motor vehicle (-22.0%), motor vehicle parts (-20.8%), and wood products (-13.1%) industries. Overall, sales of durable goods fell 5.6% in 2008.

These declines were partly offset by higher sales in the non-durable goods sector (+5.6%), which were led by petroleum and coal products (+22.2%) and food (+5.2%). Soaring commodity prices during the first half of 2008 contributed to increased sales. Both prices and sales dropped off significantly in the final two quarters of 2008 as the global economy slowed.

Note to readers

All data in this release are seasonally adjusted and are expressed in current dollars unless otherwise specified.

Preliminary estimates are provided for the current reference month. Estimates, based on late responses, are revised for the three previous months.

Non-durable goods industries include food, beverage and tobacco products, textile mills, textile product mills, clothing, leather and allied products, paper, printing and related support activities, petroleum and coal products, chemicals, and plastics and rubber products.

Durable goods industries include wood products, non-metallic mineral products, primary metals, fabricated metal products, machinery, computer and electronic products, electrical equipment, appliances and components, transportation equipment, furniture and related products and miscellaneous manufacturing.

Production-based industries

For the aerospace industry and shipbuilding industries, the value of production is used instead of sales of goods manufactured. This value is calculated by adjusting monthly sales of goods manufactured by the monthly change in inventories of goods in process and finished products manufactured.

Unfilled orders are a stock of orders that will contribute to future sales assuming that the orders are not cancelled.

New orders are those received whether sold in the current month or not. New orders are measured as the sum of sales for the current month plus the change in unfilled orders from the previous month to the current month.