Agriculture chemicals propels Canada's growth in manufacturing sales in June

OTTAWA - Statistics Canada says manufacturing sales rose 0.6 per cent in June to $52 billion — the fifth increase in six months — as unusual strength in the chemical industry offset a decline in the auto sector.

The chemical industry increased 8.6 per cent to $4.2 billion — the highest level since October 2008, as Canada was entering one of its deepest recessions.

"Much of the gain in June reflected higher than usual sales in the pesticide, fertilizer and other agricultural chemical sub-industry," the federal agency said Friday.

"This year, colder and wetter weather in the Western provinces delayed planting, leading to some sales in this sub-industry shifting from May to June, which contributed to the stronger seasonally adjusted sales for the month. In addition, sales of pharmaceuticals and medicines also rose in June, contributing to the overall gain in the chemical industry."

Excluding chemicals sector, Canada's total manufacturing sales edged down one per cent in June.

The Ontario-focused auto sector was a drag last month, with sales falling 8.6 per cent to $4.5 billion — the first decrease after two months of strong gains, StatsCan reported.

In Ontario, which accounts for nearly half of Canada's overall manufacturing sales, there was a 1.3 per cent decline to $23.8 billion in June, following four months of gains. The decline was attributed to an 8.5 per cent drop in motor vehicle manufacturing sales and, excluding that, sales for the province were up 0.5 per cent.

"Despite the decrease in June, overall manufacturing sales for the province over the first half of 2014 were $140.7 billion, up 5.0 per cent compared with the same period in 2013," Statistics Canada said.

In addition to chemicals, there were also gains in petroleum and coal products, up four per cent to $7.6 billion, and food industries, up 2.2 per cent to nearly $8 billion. In addition to auto assembly and auto parts, there were declines in aerospace product and parts, down 4.0 per cent to $1.5 billion, and paper manufacturing, down 3.4 per cent to $2.1 billion.

The agency says there were higher sales in six provinces, led by Alberta.

"In Alberta, sales rose 4.7 per cent to $6.9 billion, the sixth consecutive monthly gain. Total sales over the first six months of 2014 were 9.6 per higher than in the same period in 2013."

In Alberta's chemical industry, sales in June rose 12.5 per cent following a 6.2 per cent decline in May.

"Some sales in this industry shifted from May to June following a later than normal planting season. The machinery industry was also up in June, reflecting higher sales of mining and oil and gas field equipment," StatsCan said.

In Quebec, which has Canada's second-highest level of manufacturing sales, there was a 2.3 per cent increase to $12.1 billion, following two months of declines. Most of Quebec's gain in June was from higher sales in the petroleum and coal product industry. There were also increases in the chemical and primary metal industries, the agency said.

During the first half of 2014, manufacturing sales in Quebec were up 5.8 per cent compared with the same period in 2013.

Statistics Canada says constant dollar sales — which adjust for inflation — rose 0.2 per cent in June.

Inventories rose 0.5 per cent to $72.2 billion in June, the fifth increase in six months. New orders rose 0.6 per cent to $51.7 billion in June as a result of gains in 12 of 21 manufacturing industries.

Unfilled orders slipped 0.3 per cent to $89.1 billion. The decline was due to the aerospace product and parts industry, where unfilled orders were down two per cent to $47.0 billion, the fourth consecutive monthly decline, StatsCan said.

A 3.6 per cent decrease in the value of the U.S. dollar since the end of February was the primary factor causing these declines. Most unfilled orders in the aerospace industry are held in U.S. dollars."