INDUSTRY PULSE: Manufacturing shipments drop again

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OTTAWA, Ont. — Widespread declines in July pulled down manufacturing shipments by 1.4% to $50.1 billion, Statistics Canada reports.

July’s decrease in shipments, the fourth so far in 2005, was wide ranging as 16 of 21 industries, accounting for 92.5% of total shipments, posted declines. The trend for shipments, negative since November 2004, has been declining at a slow but relatively steady pace.

"Manufacturers continued to face challenges in 2005 that remained largely beyond their control. The soaring cost of inputs, the heightened value of the Canadian dollar and increased foreign competition have taken a toll on the sector. At 1997 prices, factory shipments dropped 1.3% to $46.2 billion, as manufacturers cut production volumes," Statistics Canada commented in its Daily Bulletin.

According to the latest Labour Force Survey, manufacturers continued to shed jobs during the summer. Following a decline of 26,000 in July, manufacturing employment was trimmed by another 8,500 in August. The number of factory jobs has fallen by 4.7% or 108,000 since August 2004.

In other manufacturing-related news, weak export growth in the second quarter of 2005 contributed to the first decline in four quarters of the manufacturing sector’s capacity utilization rate. According to the release of industrial capacity utilization rates, the rate for the manufacturing sector fell 0.4 percentage points to 86.7% in the second quarter. The transportation equipment, chemicals and non-metallic mineral products industries contributed most to the drop.

Ontario and Alberta led the six provinces and territories reporting lower shipments in July.

In Ontario, a larger-than-seasonal decline in motor vehicle manufacturing, coupled with decreases in shipments of primary metals and plastics and rubber products, contributed to a $525 million (-2.0%) decrease overall. Shipments were $25.4 billion in July, comprising just over one-half of Canada’s total.

Alberta’s manufacturers also reported widespread declines, led by computer and petroleum manufacturing. Shipments were down $219 million (-4.4%) to $4.7 billion in July.

Counterbalancing some of the weakness, Quebec’s manufacturers posted the third increase in shipments in four months. Shipments jumped by $268 million (+2.3%) to $12.1 billion, propped up by gains in aerospace manufacturing.

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