OTTAWA — Even with a Canadian dollar approaching parity with the U.S. Greenback and increasingly higher raw material prices, manufacturers remain somewhat optimistic about production and employment prospects in the coming three months.

According to Stats Canada’s quarterly Business Conditions Survey, 21 percent of manufacturers stating they would increase production over the next quarter — down only one point from April.

The percentage of manufacturers saying they would decrease production in the third quarter was down 1 point to 15 percent.

Manufacturers in Nfld, NS, Ontario, and the three
westernmost provinces say the next three months look good.

The survey requests manufacturers’ opinions on production impediments, finished product inventory levels, new and unfilled order levels and production and employment prospects. The voluntary survey was conducted in the first two weeks of July and attracted over 3,000 responses from manufacturers.

The April and July balances of opinion are the most positive posted since the October 2004 survey (+11), reports Stats Canada.

Production prospects continued to be positive in Newfoundland and Labrador, Nova Scotia, Ontario, Saskatchewan, Alberta and British Columbia. On the other hand, opinions reported by manufacturers in Prince Edward Island, New Brunswick, Quebec and Manitoba were negative.

Producers of chemical products, transportation equipment, and plastic and rubber products, as well as electric equipment, appliances 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 third quarter of 2007.

Satisfaction with new orders less positive:

While 25 percent of manufacturers said that the current level of new orders was increasing, those stating they were falling jumped 8 points to 19 percent. Producers in primary metal, paper and wood product industries were the major contributors to the lowered balance of opinion.

While most manufacturers continued to describe the backlog of unfilled orders as normal, about 13 percent of indicated unfilled orders was higher than normal, while 18 percent reported a lower than normal backlog.
With the exception of the April survey, the balance of opinion for unfilled orders has been negative since October 2004.

Finished prods levels are good, though:

In July, 79 percent of manufacturers reported that the current level of finished-product inventories was about right, up 1 point from April.
Some 16 percent said that inventories were too high, while 5 percent said inventories were low.