Canadian manufacturing sales were essentially unchanged in September at $80.2 billion, as declines in primary metals and wood products offset gains in petroleum and coal products, according to new data from Statistics Canada.

The monthly result followed a 1.8 per cent increase in August, while manufacturing inventories and unfilled orders continued to climb, with unfilled orders reaching a record $136.8 billion.

On a year-over-year basis, manufacturing sales increased 10.9 per cent. However, sales measured in constant dollars, which account for price changes, fell 1.5 per cent in September, marking the largest monthly decline since January 2026.

Primary metals and wood products weigh on sales

Sales declined in 11 of Canada's 21 manufacturing subsectors in September, led by primary metals, which fell 9.5 per cent to $7 billion, and wood products, down 7 per cent. Petroleum and coal products recorded the largest increase, with sales rising 10 per cent to $11.5 billion.

Excluding petroleum and coal products, total manufacturing sales declined 1.5 per cent during the month. Statistics Canada said the increase in petroleum and coal product sales was primarily driven by higher prices, as constant-dollar sales in the subsector decreased 0.6 per cent.

Ongoing conflict in the Middle East continued to put upward pressure on refined petroleum product prices, contributing to the monthly increase. On a year-over-year basis, petroleum and coal product sales in current dollars were up 50.1 per cent in September.

The decline in primary metal sales followed a record high in August and was driven primarily by lower sales volumes. Constant-dollar sales in the subsector fell 8 per cent, with the non-ferrous metal (except aluminum) production and processing industry group accounting for most of the decrease.

Statistics Canada noted that the decline in non-ferrous metal sales coincided with a 26.6 per cent drop in exports of unwrought copper and copper alloys in September.

Third-quarter manufacturing sales increase

Despite the relatively flat September result, manufacturing sales in current dollars increased 1.7 per cent to $239.3 billion in the third quarter of 2026, marking the fifth consecutive quarterly increase.

Primary metals contributed the most to the quarterly gain, with sales rising 8.5 per cent to $21.4 billion. Machinery sales also increased, climbing 4.2 per cent. These gains were partially offset by a 3.1 per cent decline in petroleum and coal product sales.

However, after adjusting for price changes, total manufacturing sales decreased 0.3 per cent in the third quarter, led by a 10.2 per cent decline in petroleum and coal products.

The Industrial Product Price Index increased 2 per cent in September, while constant-dollar manufacturing sales fell 1.5 per cent.

Quebec records largest provincial decline

Manufacturing sales decreased in six provinces in September, with Quebec recording the largest decline. Sales in the province fell 4 per cent to $20.3 billion, following a 4.6 per cent increase in August.

The primary metal subsector was the main contributor to the decline, with sales falling 16.3 per cent to $3.4 billion. A 5.8 per cent increase in the aerospace product and parts industry group partially offset the decrease.

Despite the monthly decline, Quebec manufacturing sales remained 8.6 per cent higher than a year earlier and increased 1.9 per cent in the third quarter.

Alberta recorded the largest provincial increase, with manufacturing sales climbing 7.2 per cent to a record $11.4 billion. Sales increased in seven of the province's 21 manufacturing subsectors, led by a 20 per cent gain in petroleum and coal products.

Excluding petroleum and coal products, Alberta manufacturing sales rose 1.6 per cent in September. Sales were up 28.6 per cent year over year and increased 2.5 per cent in the third quarter.

Inventories and unfilled orders reach higher levels

Manufacturing inventories increased 1.7 per cent to $130.5 billion in September, reflecting higher stocks of raw materials and finished products.

Raw material inventories increased 2.6 per cent, while finished product inventories rose 3.2 per cent. Goods-in-process inventories declined 1 per cent.

Inventories increased in 14 of the 21 manufacturing subsectors, led by petroleum and coal products, which rose 8.9 per cent, followed by primary metals at 3.4 per cent and transportation equipment at 1.4 per cent. Machinery manufacturing recorded the largest decline, at 1.6 per cent.

On a quarterly basis, total manufacturing inventories increased 2.1 per cent in the third quarter.

The inventory-to-sales ratio also edged higher, rising to 1.63 in September from 1.60 in August. The measure represents the number of months it would take to exhaust existing inventories if sales remained at their current level.

Meanwhile, unfilled manufacturing orders increased 2.1 per cent to a record $136.8 billion in September. The increase was primarily attributable to a 2 per cent gain in the aerospace product and parts industry group and a 9.4 per cent increase in computer and electronic products.

Unfilled orders were up 3.2 per cent in the third quarter.

Manufacturing capacity utilization edges lower

The manufacturing sector's capacity utilization rate, which measures the extent to which available production capacity is being used, edged down to 81.5 per cent in September from 81.6 per cent in August.

The largest declines were recorded in petroleum and coal products, down eight percentage points, chemicals, down 2.5 percentage points, and primary metals, down 1.7 percentage points.

In contrast, capacity utilization in transportation equipment increased four percentage points during the month.