Total manufacturing inventory levels increased 2.1% to $116.4 billion in June, mainly on higher inventories in the machinery (+4.3%), transportation equipment (+2.5%) and chemical (+3.5%) product industries, according to Statistics Canada.
Raw materials, representing the largest component of inventories, have been trending upward for 20 consecutive months due to higher prices. Year over year, total inventories rose 27.7%.
The inventory-to-sales ratio increased from 1.57 in May to 1.62 in June. This ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Forward-looking manufacturing indicators encouraging
The forward-looking indicators, however, are encouraging, according to Alan Arcand, chief economist, Canadian Manufacturers & Exporters. The total value of unfilled orders rose 1.7% to $105.0 billion in June. The increases were mainly attributable to higher unfilled orders in the motor vehicle (+87.5%), aerospace product and parts (+1.4%), and computer and electronic (+3.7%) product industries. Total unfilled orders were up 19.1% on a year-over-year basis in June.
Meawhile, the total value of new orders increased 2.7% to $73.6 billion in June, largely due to higher new orders of aerospace product and parts, motor vehicles, and chemical products.