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INDUSTRY PULSE: Transportation equipment market woes pull down shipment volumes

OTTAWA, Ont. -- Volatility in the transportation equipment sector pulled down shipments 0.5% to $51.4 billion in Fe...

OTTAWA, Ont. — Volatility in the transportation equipment sector pulled down shipments 0.5% to $51.4 billion in February, Statistics Canada reported this morning. However, excluding the transportation equipment sector, manufacturers maintained the strong pace seen in January with shipments edging up 0.3%.

Just over one-half of manufacturing industries reported modest shipment declines (12 of 21) in February, accounting for 66% of total shipments.

"Industrial prices, which contributed to record high shipments for various industries in 2004, had abated somewhat by the close of the year. By February, prices for petroleum, wood products and primary metals were on the upswing again. Production volumes, which have been quite healthy in recent months, have propped up shipments valued in constant dollars. At 1997 prices, shipments edged up 0.1% to $48.7 billion in February, following a 3.0% gain in January. February marked the third increase in four months in terms of constant dollar shipments," Statistics Canada noted in its Daily Bulleting.

Big-ticket durable goods manufacturers posted a 0.6% decline in shipments to $29.7 billion. This followed a robust January when a surge of aerospace products, motor vehicles and machinery boosted shipments of durable goods by 4.3%. Meanwhile, shipments of nondurable goods edged back 0.3% to $21.7 billion in February.

Transportation equipment manufacturers, however, had a tough time. In February, shipments by manufacturers of motor vehicles retreated from the big gains reported a month earlier. Motor vehicle shipments declined 3.4% to $6.2 billion, on the heels of a 5.7% surge in January. This marked the third decrease in five months.

In late 2004, heavy duty truck manufacturers faced parts shortages, which contributed to the large gain in January’s shipments of motor vehicles as product started to move again. Following January’s boost in shipments of heavy trucks, February returned to levels of last year. Also contributing to the decrease, some motor vehicle assembly plants have temporarily closed or slowed production in recent months to reduce their dealers’ inventories for some models.

"Storm clouds continue to linger on the horizon for the motor vehicle industry. Soaring gas prices, a gradual rise in interest rates and historic over-buying of automobiles and light trucks are among several factors which may impact the North American motor vehicle industry in the months to come. On a positive note, some Canadian assembly plants are home to several popular models of motor vehicles among consumers in Canada and the United States," Statistics Canada commented.

According to the latest Daily release on Canadian international merchandise trade, exports rebounded 1.4% in February with across-the-board increases. This increase, with a bit of a lag between the production of Canadian-made products and the time when the goods leave Canada, is in step with the strong shipment values of January.

By province, Canada was evenly split in terms of shipments in February. Ontario and New Brunswick were among the five provinces reporting decreases, which offset higher production in the remaining provinces and territories, led by Alberta and Nova Scotia.

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