There’s good and bad news for Canada’s metalworking industry out of the latest national manufacturing sales figures.
The bad news is that following a 1.1% decline in May, manufacturing sales fell 0.8% to $71.8 billion in June, on lower sales in 8 of 21 industries, according to Statistics Canada’s Monthly Survey of Manufacturing. Two of the industries experiencing the steepest drops – the petroleum products industry and the aerospace products and parts industry – are critical customers for Canadian machine shops. Canada’s petroleum product sales fell 7.8 per cent in June while sales in aerospace dropped 16.8 per cent.
For aerospace it was the largest monthly decline in sales since February of 2021.
“As a result, sales were 45 per cent below their pre-pandemic levels in June, indicating that a full recovery is a long way off for the country’s aerospace sector,” commented Alan Arcand, chief economist, Canadian Manufacturers & Exporters upon seeing the Statistics Canada numbers.
Automotive bounces back for jobshops
However, automotive, another industry of critical importance to metalworking companies experienced a strong rebound from May’s drop, posting June’s strongest increase in sales.
Following a 32.6% decline in May, sales of motor vehicles increased 13.8% to $3.7 billion in June on higher production in most of the motor vehicle assembly plants in Ontario despite the ongoing semiconductor chip shortages. On a quarterly basis, motor vehicle sales rose 10.0% in the second quarter, while year over year, sales were up 27.4%.
To place the two consecutive months of manufacturing sales drop into perspective, when all industries are taken into consideration on a quarterly basis, sales rose 5.8% in the second quarter, the eighth consecutive quarterly gain and the third largest gain in dollars on record.
“Although factory sales rose 5.8% in the second quarter—the eighth consecutive quarterly increase—the back-to-back monthly declines signal that the manufacturing sector was losing momentum entering Q3. This slowdown should not be a surprise given the magnitude of the headwinds facing the sector, including high raw material costs, supply chain disruptions, labour and skills shortages, and a gloomier and more uncertain global economic outlook,” Arcand pointed out.