Wood product sales fall 17.1%
Statistics Canada recently announced in their August 2021 Monthly Survey of Manufacturing that following a 1.2% decline in July, manufacturing sales increased 0.5% to $60.3 billion in August, on higher sales of petroleum and coal (+7.3%), chemicals (+6.3) and primary metals (+3.3%). Sales of wood products (-17.1%), motor vehicles (-8.7%) and motor vehicle parts (-10.5%) declined the most. On a year-over-year basis, total sales were up 14.9% in August.
Sales in constant dollars increased 0.6% in August, indicating that the monthly gain resulted entirely from higher sales volume. The Industrial Product Price Index decreased 0.3% month over month, while the Raw Materials Price Index decreased 2.4%, the first decline since September 2020.
Manufacturing sales increased in five provinces in August, led by Quebec and Ontario, while sales in British Columbia declined the most.
Fall in wood product sales
Sales in British Columbia decreased 4.1% to $5.0 billion in August, the second consecutive monthly decline, mainly driven by lower sales of wood products. Wood product sales in British Columbia were down 18.1% to $1.0 billion in August, the lowest level since December 2020. Despite the decline, sales were up 12.0% compared with August 2020. The wood product industry has been the largest manufacturing industry in British Columbia since June 2020 and accounted for over 21% of total manufacturing sales in August.
Wood product sales fell 17.1% to $3.3 billion in August, mainly driven by lower prices for softwood lumber. Sales in constant dollars were down 3.7%, while prices for lumber and other wood products declined 14.2%. The total value of building permits in Canada decreased 2.1% in August, while exports of forestry products and building materials fell 7.9%. Despite the decline, sales of wood products were up 6.8% year over year.
Record high inventory levels
Also included in the Survey results was details on record high inventory levels. Total inventories increased 2.1% to a record high $96.2 billion in August, driven by higher inventories of plastic and rubber (+14.2%), chemicals (+6.0%) and food (+2.4%). Higher prices for raw materials over the past year contributed to the gains in total inventories. Year over year, total inventories rose 12.3%. Raw materials are the largest component of manufacturing inventories, followed by finished products. Their shares in total inventories have been rising since the beginning of the COVID-19 pandemic, mainly due to higher prices.
The inventory-to-sales ratio increased from 1.57 in July to 1.59 in August. The ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.
Annual Survey of Manufacturing advance estimate for 2020
Some 2020 advanced estimates from the Annual Survey of Manufacturing Industries are now available and indicate that activity decreased 10.0% from 2019 in the wake of the COVID-19 pandemic. Total revenue is estimated at $675.2 billion, revenue from goods manufactured is estimated at $630.5 billion and total expenses are estimated at $610.5 billion.
Respondents were asked how their business changed its operating methods (including both temporary and ongoing changes) in response to the COVID-19 pandemic. Almost 86% of those who responded indicated changes to operating methods, 63% mentioned asking some or all employees to work from home and 60% mentioned retrofitting the workplace.
These advance preliminary estimates will be revised with the official release of the Annual Survey of Manufacturing Industries on December 20, 2021. For information on why the Annual Survey of Manufacturing Industries estimates may differ from the Monthly Survey of Manufacturing, please consult the webpage Differences between the Annual Survey of Manufacturing Industries and the Monthly Survey of Manufacturing.