Manufacturing shipments rise for the first time in ’06

OTTAWA — Slow to get out of the starting gate in 2006, Canadian manufacturing activity picked up slightly in March, led by gains in aerospace production, petroleum products, and unfilled orders of heavy-duty trucks.

Following a rather lackluster start to the year, shipments rose 1.6 percent to $51.4 billion in March, the first increase so far in 2006, according to Stats Canada. Seventeen of the 21 industries, accounting for 92 percent of total shipments, posted increases. Although widespread, much of the strength was concentrated in the aerospace and price-driven petroleum industries. Excluding these industries, shipments rose a more moderate 0.3 percent.

Petroleum and aerospace led manufacturers out of the hole

A decline in petroleum prices, plus a marked slowdown in the production of motor vehicles largely contributed to the year’s tenuous start as manufacturers cut shipment activity in both January (-0.4%) and February (-2.3%).

Aerospace manufacturers led all industries with a 35.7 percent jump in production to $1.4 billion. Meanwhile, rising demand and constraints in oil production capacity, contributed to March’s 5.4 percent rebound in the industrial price of petroleum and coal products.

All provinces, with the exception of Saskatchewan and the territories, posted higher shipments in March. Quebec’s aerospace and petroleum manufacturers reported big improvements in March, says Stats Can.

Contracts received for big-ticket items including heavy-duty trucks (+15.7%) and machinery (+1.7%) contributed to the sixth successive increase in unfilled orders. Manufacturers’ backlog of unfilled orders rose another 0.5 percent to $43.5 billion in March, the highest level since November 2002.

Despite the relatively wide scope of March’s improvements, says Stats Can, manufacturers continued to face challenges which will test their productive abilities in the months to come. The strengthened value of the Canadian dollar, rising input costs and skilled labour shortages particularly in Western Canada, remained critical though unavoidable obstacles for many in the sector.

According to the recent release of the Business Conditions Survey for April 2006, these obstacles were among the primary challenges facing manufacturers in the months ahead, and contributed to their expectations of tough times ahead, says Stats Canada.