Manufacturers post modest back-to-back gains

OTTAWA — A modest, gradual bounce-back by Canada’s motor vehicle industry helped sales of manufactured goods rise 1.6 percent to $50.1 billion in February.

Stats Canada’s Monthly Survey of Manufacturing noted that this marked the second successive increase in manufacturing sales, as manufacturers continued to make up ground lost after a tough December (-3.7%).

But despite the consecutive increases, manufacturing sales were well off levels of one year ago as the sector coped with an array of economic concerns. February’s sales remained 2.3 percent below levels of the same month in 2007, and significantly below March 2007’s peak of $53.1 billion (-5.6%).

The slow recovery is being blamed mostly on the sagging U.S. economy, which continues to be held down by the ongoing credit crunch and housing crisis.

As a result, Canadian manufacturers continued to layoff workers. According to the recent release of the Labour Force Survey for March, manufacturers have cut thousands of jobs from their payrolls, including 23,700 in February and another 9,400 in March.

Auto Assembly Ramps Up:

A likely spike in upcoming spring demand
boosted the struggling auto sector in February.

The majority of manufacturing industries (13 of 21) posted higher sales in February, accounting for a healthy 84 percent of total sales.

Following extensive production slowdowns and shutdowns in December and into January for the purposes of re-tooling and inventory control, manufacturing sales of motor vehicles jumped 11.7 percent to $4.3 billion in February. This followed a 3.9 percent gain in January, and a deep cut of 27.3 percent in December to close 2007.

That said, motor vehicle manufacturing sales remained well off levels of one year ago (-20.5%). Deteriorating car and light truck sales in the United States, where the bulk of Canadian-made vehicles are shipped, indicate uncertain times ahead for the industry, notes Statscan.

Meanwhile, production of aerospace products and parts surged 11.6 percent to $1.5 billion in February, the first increase since November.

A 4.9 percent decline in the electrical equipment, appliance and components industry slightly counterbalanced the overall rise in total manufacturing sales.

Manufacturing sales increased in seven provinces, with Ontario (up 2.4%) and New Brunswick (10%) accounting for the bulk of the rise.

Alberta was the main offsetting province, as sales declined by 0.4 percent to $5.6 billion because of maintenance shutdowns in the petroleum products industry.

Inventories Decline:

Manufacturers posted a modest 0.3 percent drop in total inventories to $65.6 billion. The decrease was concentrated in the primary metals (-2.8%) and aerospace products (-3.1%) industries, which were partly offset by a rise in inventories of petroleum products (+7.8%) and food (+1.4%).

Inventories in the petroleum and coal products industry jumped 7.8 percent to $4.7 billion as refineries tried to keep pace with strong demand.