Canadian manufacturing sales saw a significant decline in March 2024, dropping by 2.1% to $69.9 billion. This downturn was primarily driven by reduced sales in the petroleum and coal products and motor vehicles sectors, which saw decreases of 8.0% and 7.9% respectively. Conversely, the machinery subsector experienced a notable increase, rising by 2.9% to $4.5 billion.
Sales in constant dollars fell by 2.0% in March, indicating that fewer goods were sold despite the Industrial Product Price Index rising by 0.8%. This suggests that the decrease in sales volume was a significant factor in the overall decline, not merely price adjustments.
On a quarterly basis, manufacturing sales in current dollars decreased by 0.9% in the first quarter of 2024. This quarterly decline was mainly due to lower sales in transportation equipment, which fell by 3.0%, and primary metals, which dropped by 4.4%.
The petroleum and coal products sector faced the most substantial monthly drop, with sales decreasing by 8.0% to $8.0 billion in March. This followed a 5.7% increase in February. The decline was due to lower volumes, down 6.1%, despite a 1.8% rise in the prices of refined petroleum energy products. Additionally, exports of these products fell by 5.8%. Quarterly, the sector saw a slight decline of 0.3%.
Sales of motor vehicles dropped by 7.9% to $4.6 billion in March, following two months of increases. Sales of motor vehicle parts also fell by 2.8%. The ongoing retooling at major auto assembly plants in Ontario heavily impacted this sector, contributing to a 6.7% decrease in auto exports. For the first quarter of 2024, motor vehicle sales declined by 4.1%.
The machinery subsector showed resilience, with sales rising by 2.9% to $4.5 billion in March, breaking a three-month streak of declines. This growth was driven by increased sales in all seven machinery industry groups, particularly commercial and service industry machinery, which surged by 41.6%. Quarterly, machinery sales edged up by 0.5%.
Manufacturing sales fell in eight provinces, with Ontario and Alberta experiencing the most significant declines. Ontario’s sales decreased by 2.4% to $30.7 billion, the lowest since September 2022, mainly due to the slump in motor vehicle sales. Alberta saw a 5.3% drop to $8.3 billion, largely attributed to decreases in the petroleum and coal and chemical product subsectors.
In contrast, Manitoba saw an increase in sales by 1.4% to $2.3 billion, driven by higher chemical sales. However, this was partially offset by lower transportation equipment sales. On a quarterly basis, Manitoba’s total sales rose by 2.7%.
Total inventories remained largely unchanged at $121.0 billion in March, after three months of decline. While inventories of goods in process increased by 2.3%, this was offset by decreases in raw materials and finished products, both down by 0.7%. Inventories of aerospace products and parts rose by 3.6%, while computer and electronic product inventories fell by 10.1%. Compared to March 2023, total inventories were down by 2.2%.
The inventory-to-sales ratio increased from 1.69 in February to 1.73 in March, indicating a longer duration needed to exhaust current inventories if sales remain at the current level.
Unfilled orders saw a slight decline of 0.8% to $104.8 billion in March, following three consecutive monthly increases. The primary contributor to this decrease was lower unfilled orders in the railroad rolling stock manufacturing sector.
The capacity utilization rate for the total manufacturing sector decreased slightly from 78.3% in February to 78.0% in March. Declines were notable in the petroleum and coal, chemical product, and fabricated metal subsectors, while the wood product subsector saw an increase.
March 2024 proved challenging for Canadian manufacturing, with significant declines in key sectors and provinces. Despite some areas of growth, particularly in machinery and certain provinces like Manitoba, the overall trend indicates a slowdown in manufacturing sales. This underscores the need for strategic adjustments and monitoring of market conditions moving forward.