Mfg shipments rebound in most sectors after major low

OTTAWA — A strong showing in the transportation equipment sector helped Canadian factory shipments bounced back in November after hitting their lowest level in nearly two years in the third quarter of 2006.

Canadian manufacturers shipped goods worth an estimated $49.0 billion, up 2.3 percent from October, after trending downward for most of the year, according to Stats Canada’s monthly manufacturing survey. Widespread price declines had little effect on the value of shipments, especially in the petroleum and coal industry.

On a year-to-date basis, the volume of shipments fell 1.6 percent between January and November 2006, compared with the same period in 2005.
November’s rise was widespread as 13 sectors, representing 73 percent of total output, increased, according to StatsCan.

Thanks to a strong transport equipment market — driven mainly by the introduction of new model launches and a 13.7-percent rise in motor vehicle shipments — durable goods increased for a second consecutive month following three months of decline, rising 3.1 percent to $26.8 billion.

The sector shipped $9.7 billion worth of product in November, the highest level in eight months.

Meanwhile, aerospace shipments also rose 9.5 percent to $1.3 billion following a similar sized decline in October. Transportation equipment led Ontario’s jump in shipments, contributing 84 percent of the $859 million increase. Without it, shipments would have risen only 0.5 percent.

Food manufacturing, the second largest after transportation equipment, made up some lost ground in November with a 1.2 percent increase to $5.7 billion — the third highest level in two years.

Coincident with November’s increase in shipments, the Labour Force Survey indicated that manufacturing employment also rebounded rising an estimated 13,200 to over 2.1 million. Despite November’s increase, year-to-date job losses in the industry still totaled 72,000.

Inventories Increase 5X in a Row:

Total inventories for manufacturers increased 0.3 percent to $63.6 billion in November, the fifth increase in a row and an increase of $1.5 billion since the start of the year.

By stage of fabrication, goods in process inventories had climbed consistently over the past two years, but fell marginally in November, states StatsCan.

Inventories of raw materials and finished products rose marginally, while petroleum and coal finished product inventories rose on warmer weather in Eastern Canada and the United States.

Inventory-to-Shipments Down Again:

The inventory-to-shipment ratio, which had risen for three consecutive months, turned back, falling to 1.30 from 1.33.

With shipments rising faster than finished goods inventories, the finished product inventory-to-shipment ratio fell back modestly to 0.46 from October’s ratio of 0.47.

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.