The Canadian manufacturing sector recorded its second consecutive monthly decline in September 2024, as sales dipped by 0.5% to $69.1 billion. The downturn marks a continuation of challenges within the industry.
Sales in the petroleum and coal product subsector declined, falling 7.5% to $7.1 billion in September, following a 5.1% drop in August. The reduction was attributed to lower volumes and prices, with refined petroleum energy product prices sliding 7.9%. The decline reflects subdued global demand for energy.
The aerospace product and parts industry experienced a 4.2% decrease in production, dropping to $2.5 billion after an impressive August performance that ranked as the second highest on record. While year-over-year production remained up 9.7%, the quarter saw a 1.6% decline, halting a streak of three consecutive quarterly gains.
In contrast, motor vehicle sales rose 2.9% to $4.4 billion, largely buoyed by stronger activity in Ontario. However, the industry’s quarterly performance painted a different picture, with a 5.1% decline marking its lowest level since late 2022. Retooling at assembly plants and sluggish consumer demand contributed to the weaker results.
Regional Variations Highlight Diverging Trends
Manufacturing sales decreased in six provinces, with Quebec and Saskatchewan experiencing the sharpest drops.
Quebec: Sales fell by 1.1% to $17.8 billion, primarily due to a 7.5% decline in transportation equipment and a 7.9% dip in petroleum and coal product sales.
Saskatchewan: Sales plummeted by 8.4% to $1.8 billion, driven by an 11.8% drop in non-durable goods. However, quarterly figures for the province were up 6.7%, led by a significant 13.6% increase in food product sales.
New Brunswick: Bucked the trend with a 5.3% rise in sales to $2.1 billion, propelled by a 6.2% boost in non-durable goods.
Inventory levels edged down 0.4% to $120.2 billion, the lowest since July 2022, reflecting reductions in wood product and primary metal subsectors. Despite the drop in inventories, unfilled orders grew 1.6% to $105.3 billion, driven by a 21.2% surge in the machinery subsector, although aerospace orders dipped by 1.6%.
The inventory-to-sales ratio remained steady at 1.74, signaling consistent supply chain conditions relative to sales.
Manufacturing capacity utilization dropped from 79.5% in August to 78.6% in September, reflecting lower output across several key subsectors, including petroleum, primary metals, and fabricated metals. Wood product manufacturers, however, reported a 4.9 percentage point rise in utilization rates.
On a quarterly basis, the sector’s total sales fell 1.3%, marking the fourth consecutive quarterly decline. This extended weakness underscores ongoing challenges such as global energy demand volatility, automotive retooling, and shifting consumer patterns.
As Canada navigates this uncertain manufacturing landscape, stakeholders across industries are closely monitoring trends to adapt to evolving market conditions. Despite pockets of resilience, such as in motor vehicles and food products, the sector’s overall trajectory remains a concern for policymakers and economists alike.