Canadian Manufacturing Down 3.1% In December

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CANADA MANUFACTURING
Canada's manufacturing sector took a hit in December 2012. (AP) | AP

OTTAWA - A seasonal pause by Ontario's auto industry, combined with weakness in a broad range of other sectors, pushed Canada's manufacturing sales in December to the biggest month-to-month decline in nearly four years.

Statistics Canada said Friday that sales fell in 16 of 21 industries, representing 82 per cent of the manufacturing sector.

The agency said overall Canadian manufacturing sales fell 3.1 per cent in December to $48 billion, the largest decline since May 2009 — a far bigger dip than expected.

About half of the decrease reflected lower sales in the transportation equipment industry, while sales were also down in the chemical, petroleum and coal product as well as the fabricated metal product industries, according to Statistics Canada.

"The December dip more than offsets a strong November gain and is consistent with the choppy pattern shipments data have shown throughout the year," TD economist Jonathan Bendiner said in a research note.

He said the auto industry was the main source of weakness, as assembly sales plummeted 15.4 per cent in December.

"It is common for assembly plants to shut down temporarily in December, but today's numbers came in much weaker than the norm for December," Bendiner said.

However, he said U.S. demand for autos is anticipated to remain strong in 2013 "which bodes well for Ontario's auto manufacturers."

BMO Capital Markets analyst Jennifer Lee noted that the U.S. auto sector also hit a soft patch, according to January statistics released Friday. She said U.S. industrial production would have been up 0.1 per cent last month if autos were excluded but, instead, overall output fell 0.1 per cent.

Erin Weir, president of the Progressive Economics Forum, noted the December manufacturing numbers follow earlier data showing a drop in Canadian manufacturing employment in January.

"Lower manufacturing sales in December are an ominous sign for Canada’s economy because a manufacturing rebound was what had propelled gross domestic product higher in November," Weir wrote Friday.

"There is reason to worry that weak manufacturing will hobble the Canadian economy."

However, Ontario took the brunt of the December weakness — with more than two-thirds of the decline in manufacturing sales.

In Ontario, overall manufacturing sales fell 4.6 per cent to $21.9 billion. The motor vehicle assembly industry was down 15.9 per cent, aerospace was down 41.2 per cent, chemical dropped 4.3 per cent, computer and electronic products fell 9.8 per cent, and motor vehicle parts fell 2.7 per cent..

In Alberta, sales fell 4.5 per cent to $5.8 billion, the third consecutive monthly decrease. The drop reflected declines in the machinery, fabricated metal product and chemical industries, which were down 16 per cent, 14.5 per cent and 4.8 per cent respectively.

Sales were also down on a seasonally adjusted basis in Newfoundland and Labrador, New Brunswick, Manitoba, and British Columbia. There were increases in P.E.I., Nova Scotia and Saskatchewan, which have relatively small manufacturing sectors, as well as Quebec.

In Quebec, sales were up 0.7 per cent to $11.6 billion — the second-highest after Ontario — offsetting a small portion of the overall national decline. Higher production in the aerospace product and parts industry was responsible for the province's gain.

Statistics Canada reported that December sales of durable goods — items that are expected to last three years or more — were down 4.2 per cent while non-durable goods sales declined 2.0 per cent.

Constant-dollar sales decreased 3.8 per cent, indicating that the decline in manufactured goods sold was a result of lower volumes.

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