OTTAWA, Ont. — Inventories, which had been accumulating since February, fell 0.5% to $63.4 billion in May. Despite the drop, however, manufacturing inventories continued their upward trend.
The main contributor to the decline was the aerospace products and parts industry. Aerospace inventories fell 2.8% to $7.7 billion, the first decrease in four months. Plummeting orders and weak shipment levels over the last year and a half had a severe impact on the aerospace industry.
Inventories of petroleum and coal products, which reached a 19-month high in April, fell back 7.8% to $1.6 billion in May.
Meanwhile, inventories of motor vehicles decreased 3.8% to $1.4 billion, the lowest level since September 1999. Manufacturers continued to streamline inventories, as demand for new motor vehicles in North America remained uncertain.
Decreases in raw materials and goods-in-process inventories contributed to the decline in total inventories. Raw materials fell 1.0% to $27.5 billion, the lowest level since January. Meanwhile, goods-in-process inventories slipped 0.5% to $15.8 billion in May, largely offsetting April’s 0.6% increase.
The ongoing weakness of the economy in the United States, Canada’s largest trading partner, is contributing to the recent build-up of finished-product inventories. Finished-products increased 0.3% to $20.1 billion in May, edging closer to the record high of $20.2 billion established in June 2001. Following the fourth increase in a row, finished-product inventories are at the highest level since June 2001.
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