A big drop in the automotive industry helped push manufacturing sales down 1.7% to $51.2 billion in August, erasing the 1.3% gain recorded in July, Statistics Canada reported today.

StatsCan said the economic slowdown in the United States – the market for 85% of Canadian autos and parts – was to blame for the poor performance in the motor vehicle industry. The industry, in turn, pulled down Canadian manufacturing sales overall.

The transportation equipment sector as a whole was down 9.7% in August, erasing most of the 10.8% gain reported a month earlier.

Excluding motor vehicle and parts, manufacturers’ sales increased 0.2% in August, the eighth increase in the past 12 months.

Ontario reported the sharpest percentage decrease in provincial manufacturing sales, dropping 4.6% or $1.2 billion. Saskatchewan had a strong month of sales, surging ahead 15.4% compared with July.

On an industry-by-industry basis, sales fell in 11 of 21 manufacturing industries, representing about 56% of total sales.

Sales of durable goods dropped 2.8%, the fourth decrease in the last five months. Non-durable goods were off 0.4%.

New orders dropped five% in August after a strong July.

There were some bright spots, though. The aerospace industry reported that production increased 3.8% in August, recovering some of the 13.4% drop in July.

A two-month strike at a major Quebec primary metals plant ended at the end of July and industry sales increased 3.5% in August to $4.6 billion, despite a 5.2% drop in prices.

For the first time in a year, manufacturers’ backlog of orders edged down 0.1% to $54.9 billion, although unfilled orders remained a third higher than in August 2006.

Unfilled orders may be considered an indicator of future sales, assuming orders are not cancelled.

Manufacturers’ inventories edged down 0.2% to $66.7 billion in August. Inventories have remained flat over the last five months after decreasing slightly at the end of 2006 and the first few months of 2007.