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INDUSTRY PULSE: Resurgence of motor vehicle business boosts manufacturing shipments

OTTAWA, Ont. -- A sizeable jump in motor vehicle manufacturing boosted total manufacturing shipments by 0.9% to $52...

OTTAWA, Ont. — A sizeable jump in motor vehicle manufacturing boosted total manufacturing shipments by 0.9% to $52 billion in October, Statistics Canada reports.

Although total manufacturing was up in October, the increase was quite concentrated as only 10 of the 21 manufacturing industries, accounting for 57% of the total, posted higher shipments.

At 1997 prices, shipments rose a modest 0.3% to $47.8 billion, partly making up for September’s 0.8% decline.

Following a weak September (-7.3%), manufacturers of motor vehicles bounced back in October with shipments rising 7.6% to $6.2 billion. October’s gains were attributable to a boost in production of 2006 models by some plants, coupled with the fact that Canada is currently home to the assembly of several popular makes of cars and light trucks in North America.

Excluding the volatile motor vehicle and parts industries, total manufacturing shipments remained unchanged (+0.0%) from September’s level.

“The motor vehicle industry is in the midst of restructuring itself in light of soaring costs, shifting product demand and offshore competition. Recent reports of plant closures and significant job cuts, coupled with announcements of major investments in infrastructure, weigh heavily on the future prospects of motor vehicle manufacturing,” the government statistical agency commented in its Daily Bulletin.

In the shadow of October’s big gain in motor vehicle shipments, manufacturers of chemicals, railroad rolling stock and machinery also contributed to the rise.

Strong demand, coupled with a tight supply of product in the United States, has bolstered prices of chemical products in recent months. As a result, October’s shipments of chemical products rose another 2.2% to $4.2 billion, the third successive increase.

Production of railroad rolling stock recovered from a sharp drop in September that was due to temporary operational problems at some plants. The industry, which has received a wave of new orders for commuter rail cars in recent months, boosted production by 40.4% to $310 million in October. Machinery manufacturers also posted a substantial gain in shipments of 2.8% to $2.7 billion.

Offsetting some of the increases, a sharp 3.2% drop in the industrial price of petroleum in October pulled down the value of shipments of petroleum and coal products by 2.4% from September’s record level of $5.2 billion. Recent labour disruptions partly contributed to a 3.0% drop in the primary metals industry.

Six provinces and the Yukon reported higher shipments in October. The bounce back in motor vehicle manufacturing lifted shipments in Ontario by $424 million (+1.6%) to $26.7 billion, leading all provinces. However, the picture changes in Ontario when the motor vehicle and parts industries are excluded, with shipments falling 0.2% in October.

Manufacturing in Quebec rose by $62 million (+0.5%) to $12.2 billion, the fourth increase in the last five months. British Columbia posted a $53 million (+1.5%) gain in shipments to $3.6 billion, making up for a weak September (-0.5%).

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