Manufacturers more upbeat on 2Q

OTTAWA — Prospects for production and employment for the second quarter of 2007 is looking slightly better for Canadian manufacturers, according to Stats Canada’s April Business Conditions Survey.

The survey collects 3,000 manufacturers’ opinions on production impediments, finished product inventory levels, new and unfilled order levels and production and employment prospects in the coming three months.

In April, 22 percent of manufacturers stated they would increase production over the next three months, a four-point rise from the January survey. At the same time, manufacturers indicating they would decrease production in the second quarter dropped 7 points to 16 percent.

The improved production prospects were attributed mostly to manufacturers in Ontario. While most other provinces posted a positive balance, opinions reported by manufacturers in Quebec and Alberta remained negative.

Producers of computer and electronic products, transportation equipment and electric equipment, appliance and components industries were the major contributors to the positive balance. In all, 12 of the 21 manufacturing industries posted a positive balance for production prospects in the second quarter of 2007.

Satisfaction With New Orders:

While 22 percent of manufacturers stated the current level of new orders was increasing, those who said the level of new orders was decreasing fell 12 points to 10 percent. As a result, the April balance of opinion increased 9 points from the January survey to +12.

The improvement in the balance was widespread as 13 of the 21 industries indicated greater satisfaction with current levels of new orders. Producers in petroleum and coal products and electric equipment, appliance and components were the major contributors to the improved balance of opinion.

Unfilled Orders Improve Too:

Some 16 percent of manufacturers indicated that the current level of unfilled orders was higher than normal and 16 percent claimed a lower than normal backlog.

Producers in the transportation equipment and computer and electronic products industries were the major contributors to the improved opinion of unfilled orders, which had been negative since October 2004.

Employment Prospects Positive:

The April balance of opinion for employment prospects improved six points from the January survey and the first positive balance since April 2005. Some 68 percent of manufacturers stated that they would keep their current work force, 17 percent indicated they would increase it and 15 percent indicated that they expected to decrease employment in the second quarter of 2007.

Regionally, negative balances in Ontario (-4) and Quebec (-4) were offset by positive balances in the remaining provinces, where manufacturers continued to express difficulty in finding skilled labor.

Greater Production Impediments:

The number of manufacturers reporting production impediments increased 6 points to 29 percent in the April survey.

Concern with the labor dispute in the rail industry was responsible for most of the increase, while skilled and unskilled labour shortages were also among the factors cited.

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