Manufacturing continues to tumble

OTTAWA — The last few months haven’t been too good for Canadian manufacturing after a decent rebound in early spring.

Manufacturing shipments continued to fall in June — this time by 1.8 percent to $48.6 billion. This was the largest decrease since January and the third consecutive monthly decline, reports Stats Canada.

Despite these decreases, second-quarter shipments still managed to gain 0.7 percent compared with the first quarter of 2007. This was due to high shipment levels at the start of the second quarter after a particularly strong March.

Manitoba continued to be a good story where
shipments are up nearly 14 percent this year over ’07.

Examining the first six months of this year, manufacturing shipments were still up by a hair at 0.1 percent compared with the first six months of 2006.

In addition to the sharp decline in the transportation equipment industry, many other sectors also reported a drop in shipments in June. On a sector-by-sector basis, 13 of 21 manufacturing industries decreased, representing about 75 percent of total shipments.

Excluding motor vehicles and parts, shipments in June were notably less weak, losing only 0.5 percent.

Shipment decreases were led once again by durable goods manufacturers, whose shipments dropped 3.2 percent, a third consecutive monthly decrease.

Transportation equipment, primary metals and machinery manufacturers were the primary contributors to the slump. Price-driven declines in petroleum and pulp and paper helped to fuel this reduction as well, says Stats Canada.

The automotive industry was again at the forefront of weaker shipments, mainly in Ontario. Motor vehicle shipments plunged for the third consecutive month, decreasing by almost $650 million (-13.3%), the largest monthly loss since August 2003. An appreciating Canadian dollar and soft conditions in the U.S. auto market, which is the primary destination for over 85 percent of domestically produced automotive products, contributed to the recent downturn in motor vehicle shipments.

Primary metal shipments lost ground for a second consecutive month, slipping by 0.8 percent.

Unfilled factory orders, a proxy for future shipment performance, were strong once again, though, increasing 2.0 percent in June to $49.8 billion. New orders dipped slightly by 1.0 percent to $49.6 billion, as a result of weakness within the transportation sector.

The four largest provinces (British Columbia, Alberta, Ontario and Quebec) in terms of manufacturing shipments each posted decreases in June, while the Maritime Provinces, as well as Manitoba and Saskatchewan, reported moderate-to-strong increases during the month.

Shipments in the Maritime Provinces were particularly strong in June, led by a 15.6 percent surge in New Brunswick and a 13.2 percent gain in Newfoundland and Labrador. Shipment strength in both provinces came largely from non-durable goods manufacturers.

Shipments in Manitoba continued to be a good news story, reporting a 1.0 percent increase compared with May. Over the first six months of 2007, Manitoba was up 13.7 percent compared with the same period in 2006.

New orders continue to slide:

After peaking at an all-time high in December 2006, new orders decreased for the fourth time in six months in June, slipping below the $50-billion mark to $49.6 billion.

Meanwhile, manufacturers’ total inventories increased slightly, gaining 0.4 percent to $62.8 billion.

With shipments dipping and inventory levels increasing slightly, the inventory-to-shipment ratio edged up to 1.29 in June.

The inventory-to-shipment ratio is a measure of the time, in months, that would be required to exhaust inventories if shipments were to remain at their current level.