Manufacturing sales fall 11% in October
Sask. decline driven by slump in commodities — not just price of oil
Saskatchewan manufacturing sales fell 11 per cent to $1.16 billion in October from $1.3 billion in the same period last year, due to declines in sales of both non-durable and durable goods, according to Statistics Canada data released Tuesday.
Doug Elliott, publisher of Sask Trends Monitor, said the doubledigit decline in manufacturing sales was driven by the overall slump in commodity prices, not just the plummeting price of oil.
"(The decline) is more or less the same in durable and non-durable goods,'' Elliott said, noting that non-durables, like food, chemical and petroleum products, were down 14.5 per cent, while durable goods, like machinery and equipment, were down 15 per cent.
Oil prices in October (US$46 per barrel WTI) were roughly half what they were in October 2014 (US$84). But Elliott noted that sales of machinery and equipment were down 23 per cent, while fabricated metals fell 26 per cent.
Saskatchewan machinery and equipment manufacturers and metal fabricators generally serve the agricultural, energy and mining sectors. "I don't know what percentage of our manufacturing sector is related to commodities, but I'll bet it's 80 per cent,'' he said.
On a more positive note, manufacturing sales were up 1.3 per cent from $1.14 billion in September, suggesting a bit of rebound could be happening. But Elliott said yearover-year numbers show “things are getting worse. We're probably down 12 per cent for the year (2015).''
"Saskatchewan is among three provinces that suffered doubledigit declines in manufacturing sales over the past year,'' added Erin Weir, NDP MP for Regina– Lewvan. The others were Alberta (18.1 per cent) and New Brunswick (16.1 per cent).
Derek Lothian, executive director of the Saskatchewan Manufacturing Council and vice president of Canada Manufacturers and Exporters, conceded the province's manufacturing sector is not having a banner year in 2015. “First off, we have to keep in mind that not every year can be a record year.
“While 2015 has undoubtedly taken its toll on Saskatchewan manufacturers, year-to-date sales are actually roughly on par with the five-year average — down by only about two per cent,'' Lothian said. "The data, however, does underscore — despite a significant shift toward diversification — how fundamentally tied our manufacturing sector remains to the strength of both resource- and agricultural-based commodities.''
Nationally, manufacturing sales fell 1.1 per cent from September to $50.4 billion, the third consecutive monthly decrease. The drop was due to lower sales of petroleum and coal products, aerospace products and parts, and machinery.
Sales fell 5.7 per cent to $4.5 billion in the petroleum and coal product industry, due in part to maintenance work at some refineries that began in September. The aerospace product and parts industry fell 10.3 per cent to $1.6 billion, while machinery sales fell 4.6 per cent in October to $2.8 billion.
Sales fell in five provinces in October as New Brunswick posted the largest drop in dollar terms. New Brunswick saw sales fall 23.9 per cent to $1.1 billion in October, while Quebec declined 2.1 per cent to $11.8 billion.
Alberta manufacturing sales dropped 1.9 per cent to $5.5 billion. Sales rose 0.6 per cent in Ontario to $24.4 billion, helped by the motor vehicle assembly industry.