OTTAWA, Ont. — Over and above the second straight decline in shipments, there are also signals on the inventory front suggesting that Canadian manufacturing activity was cooling down, according to Statistics Canada.

Its report for October found that finished product inventories had risen 1.4% to $21.4 billion, the highest level since June 2001 and the sixth increase in seven months. Manufacturers may be experiencing difficulty moving their finished goods.

"Another indicator of waning confidence is that raw material inventories, which are generally built-up in anticipation of future production, fell 0.2% to $27.1 billion," Statistics Canada commented in its Daily Bulletin.

October’s decrease marks the first decline in eight months. Goods in process inventories declined 1.1% to $13.9 billion.

The rise in finished products inventories was nearly offset by declines in raw materials and goods in process. As a result, total inventories stood at $62.3 billion, up 0.1% from September and extending the upward trend in inventories to 10 months. Inventories have accumulated by almost 7.0% since the close of 2003.

Primary metals (+2.5%), chemical products (+1.8%), food (+1.4%) and petroleum and coal products (+2.5%) contributed to the higher level of inventories in October.