According to the latest Statistics Canada data, Canada’s manufacturing sector experienced a 1.3% decline in sales during August, bringing total sales down to $69.4 billion—the lowest since January 2022.
The sharpest decline came from the primary metal subsector, where sales dropped 6.4% to $5.3 billion. The decrease was attributed to reduced sales of non-ferrous metals. The slowdown in demand reflected reduced activity in the construction and manufacturing industries.
The petroleum and coal products subsector also faced challenges, with sales declining 3.7% to $7.8 billion, primarily due to falling prices. While sales volumes increased slightly in constant dollars, concerns about the global economy, particularly in China, continued to weigh on energy prices. Compared to the same month last year, the subsector’s sales dropped 7.9%.
Despite the overall decline in manufacturing, there were notable exceptions. The aerospace sector recorded a 7.3% rise in production, pushing its total to $2.7 billion. This represents the second-highest level on record for the industry. Year-over-year, the aerospace production soared by 23.6%.
Wood products also posted a 3.8% increase in sales to $3.1 billion, marking the fourth consecutive month of growth. In constant dollars, the sales increase was a more modest 1.9%, reflecting higher prices for lumber and other wood products, which rose 2.1% in August.
The overall decline in manufacturing sales affected eight provinces, with Alberta and Ontario experiencing the largest setbacks. Alberta saw a 3.3% drop to $8.3 billion, driven by lower food product sales, particularly in grain and oilseed milling, and a decrease in the petroleum and coal subsector. Edmonton’s manufacturing sales were particularly affected, falling 4.7%.
Ontario reported a 0.6% decrease, its third consecutive monthly decline. The sales fell to $30.0 billion, the lowest since January 2022, as the automotive sector grappled with extended maintenance shutdowns and weak demand. Sales of motor vehicles dropped 2.4%, further exacerbating the downward trend in petroleum and coal products, which declined by 2.8%. Year-over-year, Ontario’s manufacturing sales were down by a significant 9.0%.
On the other hand, Prince Edward Island bucked the trend, posting a 2.3% increase in sales to $297 million, led by higher sales of non-durable goods.
Total inventories in the manufacturing sector fell 0.6% in August, settling at $121.4 billion. The decline was primarily due to reductions in petroleum, coal, and chemical product inventories, though increases in wood products and primary metals partially offset the losses. Despite the drop in inventory levels, the inventory-to-sales ratio edged higher from 1.74 in July to 1.75 in August, reflecting a slowdown in sales relative to available stock.
Unfilled orders also declined in August, falling 0.7% to $104.6 billion. The aerospace subsector was the primary contributor to this decrease, with unfilled orders dropping by 1.3%.
In contrast to declining sales and inventories, the capacity utilization rate for the total manufacturing sector increased from 78.6% in July to 79.6% in August. Transportation equipment and chemical products led to this increase, with gains of 4.8 and 1.9 percentage points, respectively. However, the primary metal petroleum and coal subsectors saw their capacity utilization rates decline.
Looking ahead, preliminary estimates from the Annual Survey of Manufacturing Industries show that the sector generated $882.3 billion in revenue from goods manufactured in 2023, a 2.0% increase from the previous year. Total revenue across the industry is estimated at $939.8 billion, while total expenses are projected at $840.3 billion.
While August’s data points to short-term challenges for key sectors like metals and energy, ongoing growth in aerospace and wood products may provide some resilience for the manufacturing sector heading into the final quarter of the year. However, the industry faces mounting global economic pressures, particularly in energy and raw materials, which could continue to weigh on overall performance in the months ahead.