Oil greases sales slide in December
REGINA — Saskatchewan manufacturing sales were $1.33 billion in December, down 4.0 per cent from $1.39 billion in November, the largest monthly decline among the provinces, according to Statistics Canada data released Friday.
On a year-over-year basis, manufacturing sales were down 3.3 per cent from $1.38 billion in December 2013 — the second-largest percentage decline among provinces, the federal agency said.
United Steelworkers economist Erin Weir said plunging oil prices are to blame for the reduction in the value of manufacturing shipments in Saskatchewan. “Manufacturing sales include refined petroleum products, the value of which has been reduced by lower oil prices,” Weir said in a commentary Friday.
“Saskatchewan’s falling manufacturing sales, in a month when they rose in seven other provinces, underscore our province’s reliance on oil and the need to develop other economic sectors.”
Doug Elliott, publisher of Sask Trends Monitor, agreed that sales of non-durable goods, which includes petroleum products, were down 14.5 per cent (year over, unadjusted) in December. But sales of durable goods, such as machinery and equipment, were up 24 per cent during the same period.
“This was a good month (for durable goods production); fabricated metals, machinery, everything is up,” Elliott said, adding sales of fabricated metal products were up 37 per cent, while machinery shipments were up 18 per cent.
In total, sales of fabricated metal products increased 11 per cent to $833 million in 2014 from $750 million in 2013.
Nationally, manufacturing sales rose 1.7 per cent in December, despite a sharp drop in petroleum and coal products.
The federal agency says in the increase was fuelled by sales of motor vehicles, which gained nine per cent in December after falling in November.
Sales of machinery grew 5.2 per cent in December to their highest level since November 2011. Excluding the petroleum and coal product industry, which fell 9.3 per cent, manufacturing sales were up 3.2 per cent.
Sales increased in seven provinces in December, led by Ontario, Quebec and B.C.
“Gains were broad based, as nearly every sector was higher,” said Benjamin Reitzes, senior economist with BMO Capital Markets. “One major exception was petroleum and coal productions which dove 9.3 per cent, driven by sharply lower energy prices,” he said in a note to clients
“The rest of the report was encouraging, as November’s drop suggested that Canada might not be so quick to benefit from firming U.S. economic growth and a weaker loonie. Those concerns can be put on the back burner for now.”
Manufacturing sales volumes were up an even stronger 2.9 per cent, the biggest gain since July 2011 and erasing losses in the prior two months. The level of volumes remains below the post-recession peak hit in July 2014, but only by one per cent.
“Better U.S. growth and a weaker (Canadian dollar) appear to be providing a lift to Canadian manufacturing activity,” Reitzes said. “However, high capacity utilization suggests that further growth might be more difficult to attain without increased investment in the sector.”