Manufacturers’ optimism waning: StatsCan

OTTAWA — Despite all the problems facing Canadian Manufacturers’ six months ago, many were feeling pretty good about things back then. That optimism, reports Stats Canada in its October Business Conditions Survey, has waned significantly as manufacturers look ahead to the final months of 2007.

Manufacturers now indicate heightened dissatisfaction with the level of orders received, while production prospects also weakened.

Although they remained somewhat positive in the fourth quarter of 2007, manufacturers were more guarded as they continued to face severe labor shortages, coupled with ongoing pressures caused by the Canadian dollar reaching parity with the U.S. greenback.

Production Outlook Weakens:

In October, the proportion of manufacturers stating they would increase production over the next three months stood at 25 percent, up 3 points from July. This was largely offset by 23 percent who said they would decrease production, which was up from 15 percent.

Manufacturers say new orders are down, while
backlog of unfilled orders remains balanced.

Continuing positive production prospects were posted in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, Ontario, Manitoba and Saskatchewan, while opinions in the remaining provinces were negative.

Producers in transportation equipment, machinery and electric equipment, appliance and components industries were the major contributors to the positive balance. In all, 10 of the 21 manufacturing industries posted a positive balance for production prospects in the fourth quarter of 2007.

Satisfaction With New & Unfilled Orders Down:

The balance of opinion concerning current levels of new orders dropped 9 points from the July survey. Manufacturers who stated that orders were declining edged up 3 points to 22 percent in October. In contrast, those stating new orders were rising fell 6 points to 19 percent.

Although negative, the balance of opinion remains higher than the -13 posted one year earlier in the October 2006 survey. Producers in primary metal, paper, wood, and computer and electronics products industries were the major contributors to the lowered balance.

Meanwhile, 76 percent of manufacturers described the backlog of unfilled orders as normal, a six-point increase from July. However, 17 percent reported a lower than normal backlog, comparable to the previous two quarters. Producers in the wood and paper industries were the major contributors to the negative unfilled orders. With the exception of the April survey, the balance of opinion for unfilled orders has been negative since October 2004.

Employment Prospects Unchanged:

Some 64 percent of manufacturers stated that they would keep their current workforce, 18 percent said they would increase it, and 17 percent said that they expected to decrease employment in the fourth quarter of 2007.

Regionally, negative balances in Quebec (-2) and Ontario (-9) were offset by positive balances in the remaining provinces, where many manufacturers continued to experience difficulty in finding skilled labor.