Unfilled orders fall back

Unfilled orders decreased 0.9% to $46.6 billion in July, the first decline since April.

Unfilled orders are a stock of orders that will contribute to future shipments assuming that the orders are not cancelled.

"Following the economic downturn of 2001, unfilled orders had improved in recent months. July orders were subdued by the ongoing uncertainty in the aviation sector," comments Statistics Canada in its Daily Bulletin.

Orders for aerospace products and parts tumbled 3.6% to $17.6 billion in July, the tenth consecutive drop and the lowest level of orders since May 2002. Excluding the aerospace product and parts industry, unfilled orders rose 0.8%.

Slightly offsetting July’s overall decrease, manufacturers of computer and electronic products reported a 4.6% rise in unfilled orders to $4.3 billion, the fifth increase in a row for this industry. Orders for computers and their components dried up throughout 2001, as the high-tech sector slumped. Manufacturers in the electrical equipment, appliance and component industry reported a 5.6% rise in unfilled orders, only the second increase for the industry since January 2001. Key areas of the electrical equipment, appliance and component industry supply the telecommunications sector.

Although Canadian unfilled orders fell back in July, the United States reported a slight improvement as orders increased 0.3%, following a 1.6% drop in June. This was the first increase in US unfilled orders since March.

Pulled down by decreases in the aerospace product and parts industry and the computer and electronic products industry, new orders fell for the third straight month following a strong start to 2002. New orders were $43.2 billion in July, down 0.5% from June. New orders surged 4.7% in the United States, following a 2.5% decrease last month. New orders for aircraft and parts, as well as for machinery, boosted US orders this month.

New orders are those received whether shipped in the current month or not. They are measured as the sum of shipments for the current month plus the change in unfilled orders. Some people interpret new orders as orders that will lead to future demand. This is inappropriate since the “new orders” variable includes orders that have already been shipped. Readers should take note that the month-to-month change in new orders may be volatile, particularly if the previous month’s change in unfilled orders is closely related to the current month’s change.

For general information or to order data, contact the dissemination officer (1-866-873-8789; 613-951-9497; fax: 613-951-9499; manufact@statcan.ca).