Canadian manufacturing sales rose 0.8 percent to C$50.2 billion (US$39 billion) in June, following a 1 percent decline in May, according to Statistics Canada. The increase in June reflected higher sales of machinery and transportation equipment products.

Sales were up in 15 of 21 industries, representing 62 percent of the manufacturing sector. Durable goods rose 1.6 percent to C$27billion (US$21 billion), while non-durable goods decreased 0.1 percent to C$23.2 billion (US$18 billion). Constant dollar sales increased 0.5 percent, indicating a higher volume of goods sold.

Sales in the machinery industry rose 5.8 percent to C$2.7 billion (US$2.1 billion), following five consecutive monthly declines. The gain in June was the largest since September 2015 and stemmed from higher sales in the commercial and service machinery, agricultural, construction and mining machinery, and industrial machinery industries. Some types of machinery in these industries take many months to manufacture. As such, the advance in June partly reflected the delivery of orders placed several months ago.

In the transportation equipment industry, sales were up 1.4 percent to C$10.7 billion (US$8.3 billion) in June, following a 2.5 percent decline in May. The increase in June was mainly due to higher sales in the motor vehicle parts and motor vehicle assembly industries. The gains in both industries primarily reflected higher volumes, following lower production levels in May.

Following a 0.8 percent gain in May, the food manufacturing industry (-1.2 percent) posted the largest decline in June, reflecting lower sales in the dairy and meat products industry. Sales also decreased in the primary metal (-1.1 percent) and paper (-1.8 percent) industries.

Sales advanced in four provinces in June, led by Ontario.

In Ontario, sales rose 1.4 percent to C$24.7 billion (US$19.2 billion) in June. More than half of the provincial gain stemmed from a 2.2 percent increase in the transportation equipment industry. Sales were up in the machinery industry (+3.7 percent), the computer and electronic product industry (+6.2 percent) and the miscellaneous (+6.4 percent) industry. A 2.2 percent decline in the food industry offset some of the advance.

In Alberta, sales rose 1.8 percent to C$5.2 billion (US$4 billion) in June, reflecting increases in the chemical, food, and petroleum and coal products industries. This was the third gain in four months.

Sales in Saskatchewan were up 4.3 percent to C$1.2 billion (US$0.9 billion) in June, as a result of increases in the durable and non-durable goods industries. This was the fourth consecutive monthly gain.

In New Brunswick, sales were down 4.1 percent to C$1.3 billion (US$1 billion) in June, reflecting a drop in both durable and non-durable goods.

Inventory levels fell 0.2 percent to C$70.6 billion (US$54.9 billion) in June, the fifth consecutive monthly decline. Inventories decreased in 11 of 21 industries. The chemical industry recorded the largest drop, with inventory levels down 2.3 percent. Lower inventories of primary metals (-1.8 percent) and aerospace products and parts (-1.6 percent) also contributed to the decline in total inventories.

In the petroleum and coal product industry, inventories rose 3.5 percent, reflecting higher levels of finished products (+14 percent). The increase was also partly related to an advance in the prices of crude oil and crude bitumen, which were up 3.6 percent according to the Raw Material Price Index.

The inventory-to-sales ratio fell to 1.40 in June from 1.42 in May. This ratio is a measure of the time in months that would be required to exhaust inventories if sales were to remain at their current level.

In June, unfilled orders rose 1.6 percent to C$90.4 billion (US$70.3 billion), a third consecutive monthly increase. The advance reflected a gain in the aerospace product and parts industry, up 3.5 percent to C$51.1 billion (US$39.7 billion). Unfilled orders in the industry represented more than half of total orders.

Unfilled orders were also up in the fabricated metal product, chemical and food industries.

New orders increased 1.3 percent to C$51.7 billion (US$40.2 billion), the third consecutive monthly gain. The rise was mainly the result of higher new orders in the aerospace product and parts, fabricated metal product and chemical industries.

For the second month, the Monthly Survey of Manufacturing added three supplementary questions to a national sample of about 3,600 respondents to assess the effect of the Fort McMurray wildfire, which started in early May.

In June, 118 manufacturers (3.2 percent of the sample) reported that their business activities were affected by the wildfire and evacuation in the Fort McMurray area. This is a decrease from the 194 manufacturers who reported that they were affected by the wildfire in May. Among the 118 respondents reporting impacts on their business activities in June, approximately 38 percent were able to quantify the effects of the wildfire, with the majority reporting a loss of sales in terms of percentages and/or dollar values. The remaining 62 percent (60 percent in May) indicated that they were affected, but were not able to quantify the effects.

Because of the wildfire, national sales in the machinery and fabricated metal product industries in June were lower than they would have been. In June, 21 respondents in the machinery industry and 17 respondents in the fabricated metal product industry reported that their sales were negatively affected. As in May, some manufacturers in the wood product industry reported increases in their sales in anticipation of rebuilding.

From a provincial perspective, manufacturers in Alberta (41 respondents), British Columbia (25 respondents) and Ontario (22 respondents) indicated that they were affected by the wildfire and evacuation, reflecting the fact that many firms in the three provinces supply machinery and equipment to the oil and gas extraction sector.

Respondents in Manitoba, Quebec, Saskatchewan and the Atlantic provinces reported relatively fewer effects. As was the case in May, it was difficult to determine the overall effect of the wildfire and evacuation on manufacturing sales and inventories in dollar terms, given that 62 percent of respondents who specified that their firm was affected did not quantify the impact.