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INDUSTRY PULSE: Health of manufacturing sector showing slight improvement

OTTAWA, Ont. Canadas beleaguered manufacturing sector improved for the second month in a row in December, growin...

OTTAWA, Ont. Canadas beleaguered manufacturing sector improved for the second month in a row in December, growing 0.9%.
The increase came from the manufacturing of durable goods, which was up 2.0%, Statistics Canada data reveals.

Conversely, non-durable goods manufacturing fell back 0.8%.

Of the 21 major manufacturing groups, 13 increased, accounting for 64% of total manufacturing value added. Motor vehicle production contributed the most to the increase. However, pharmaceutical and tobacco production hindered the growth.

The energy sector fell 1.8% in December to its lowest level of output for 2006. This setback was due to the decline in natural gas extraction. Oil and gas exploration also lost significant ground (-4.7%), a fifth consecutive monthly drop.

Industrial production (the output of mines, utilities and factories) was essentially unchanged in December. The declines in mining and utilities offset the increase in manufacturing. In comparison, industrial production in the United States increased 0.5% in December, due to gains in manufacturing and mining, but partly offset by a decline in the output of utilities.

Overall, Real GDP grew by 2.7% in 2006, a slight deceleration from 2005, while final domestic demand was up 4.5%. Consumer spending and non-residential investment accounted for most of the growth in 2006.

Construction, retail and wholesale trade as well as finance and insurance were the main sectors contributing to growth in 2006. Manufacturing and forestry and logging were hard hit. The energy sector continued to expand but at a much slower pace than in the last four years.

Consumer spending was the leading contributor to real GDP growth in 2006 advancing 4.1%, its best performance since 1997. A solid first quarter helped establish strong annual growth in expenditures on both durable (+6.8%) and semi-durable goods (+7.2%). Declining prices in both of these groups encouraged purchases. Significant gains were also registered in purchases of services (+4.2%).

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