Manufacturing halts after soft ’06 comeback

OTTAWA — The first month of 2007 didn’t start out as well as last year ended for Canadian manufacturing shipments.

According to Stats Canada, factory shipments fell for the first time in three months in January as petroleum refiners and manufacturers of transportation equipment — principally automobiles — extended maintenance downtime into the New Year.

“The decline put the brakes on back-to-back rallies in the last two months of 2006, and completely wiped out gains made in December,” states the report.

Manufacturers shipped goods worth an estimated $48.6 billion in January, down 2.1 percent from the previous month and 2.1 percent less than the same period last year.

Overall shipments fell in 12 of 21 sectors, representing 57 percent of total output. But petroleum and autos accounted for the vast majority (96%) of the month’s decline.

Transportation’s fall was a result of car and truck manufacturers, whose output tumbled 8.0 percent to $5.1 billion. At the same time, aerospace shipments fell 8.6 percent to $1.3 billion.

Shipments of petroleum are still booming, but compared to recent months, shipments (along with coal) were down 8.1 percent because of a 4.0 percent drop in prices, coupled with lower volume shipments from Canadian refineries.

As usual, manufacturers in central Canada slip
while Alberta sees jumps despite oil slowdown

Shipments Down in Six Provinces:

Manufacturing shipments fell in six provinces in January, including the industrial heartland of Ontario and Quebec. In Ontario, shipments tumbled 3.3 percent to $23.7 billion, with more than half the decline due to falling output in the transportation equipment sector. Other factors in transportation included weaker demand for trucks and falling sales in the motor vehicle parts manufacturing industry.

In Quebec, shipments fell 3.7 percent to $11.5 billion as declines in the petroleum and coal, primary metals and the transportation equipment industries offset other gains.

Alberta, shipments rose 2.3 percent to $5.4 billion as 13 of 21 industries reported increases. The largest jump was in machinery manufacturing, mainly for oil and gas extraction, where output rose 18.6 percent.

In British Columbia, however, shipments slipped 0.4 percent to $3.5 billion, with the most significant drop was miscellaneous manufacturing, which includes such diverse industries as medical equipment and supplies, jewellery, sporting goods and office supplies.

Meanwhile, Manitoba shipments fell 1.3 percent to $1.3 billion as declines in the primary metals and transportation industries more than offset gains in food shipments. Saskatchewan shipments showed huge gains with a 11.5 percent jump to $931 million on strong production of foodstuffs.

Inventory-to-shipment Ratio Increases:

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

The ratio increased to 1.30 from 1.27 in December. Compared to a year ago, manufacturers shipped $1.2 billion less in January 2007 while holding nearly $1 billion more inventory.