OTTAWA — Manufacturers curtailed production in September after enjoying the red-hot month of August, Statistics Canada reports.

Shipment edged down 0.5 percent to $51.6 billion as a hefty decline in motor vehicle manufacturing was partly offset by increases in the aerospace and chemicals products industries.

Excluding the motor vehicle and parts industries, total manufacturing shipments increased at a reasonably healthy pace of 0.6 percent, however.

Although manufacturing activity tapered off in September, the decrease was not widespread; only 10 of 21 industries accounting for just over half of the total value of shipments (53%), posted decreases.

Manufacturing slowed most notably in
Ontario and Newfoundland this past September

The ever-volatile transportation equipment sector was the main contributor to the plunge in shipments. Extensive declines in motor vehicle manufacturing resulted in an 8.2 percent drop in shipments to $5.7 billion — hurting the auto reliant province of Ontario the most. This followed a strong August (+12.3%) when some manufacturers returned from summer shutdowns and began to boost production of the 2006 models.

In addition, the soaring cost of fuel coupled with the recent rise in interest rates, could put a further damper on the short-term prospects of the motor vehicle industry, stats Canada says.

Manufacturing activity also slowed in Newfoundland and Labrador for the third consecutive month as shipments fell by $21 million (-8.7%) to $219 million in September.

Wide-ranging gains contributed to Quebec’s rebound in September as shipments rose by $188 million (+1.6%) to $12.1 billion. Aerospace production and record high petroleum shipments contributed to the rise.

Alberta’s two largest manufacturing industries, petroleum and chemical products, led all industries in September. Manufacturers posted a $77 million (+1.6%) increase in shipments to $5.0 billion, following a 3.1 percent jump last month.

The inventory-to-shipment remained at 1.27 for the second straight month, below the recent high of 1.31 recorded last July, says Stats can. The inventory-to-shipment ratio is a key measure of the time, in months, that would be required in order to exhaust inventories if shipments were to remain at their current level.

So far in 2005, the ratio’s trend has been relatively stable following a gradual rise late last year. In 2004, the ratio bottomed-out at 1.20 as robust shipments boosted the manufacturing sector overall.

Manufacturers’ backlog of unfilled orders edged 0.1 percent higher in September to $42.0 billion, the seventh successive increase.

The steady rise in unfilled orders was in keeping with manufacturers’ improved opinion concerning their level of orders going into the fourth quarter of 2005, according to the Business Conditions Survey for October. Orders, which have risen 14 percent since the close of 2004, now stand at the highest level since December 2002.