OTTAWA, Ont. — A manufacturing slump contributed to a 3.4% decline in shipments to $43 billion in April, Statistics Canada reported this morning.

Fifteen of 21 industries, representing 68% of total shipments, pulled back production in April, underscored by the steep decline in prices of petroleum and coal products, coupled with the second drop in three months for the motor vehicle industry.

Excluding the price-impacted petroleum and coal products industry and the recently volatile motor vehicle and parts industries, shipments contracted by 1.5% in April.

Decreases in the non-durable goods sector outpaced the decline reported by durable goods manufacturers. Lower shipments of petroleum products contributed to a 4.3% drop to $18.8 billion in the non-durable goods sector, the lowest level since November. Shipments of big-ticket, durable goods declined 2.7% to $24.2 billion in April.

The slump follows a relatively strong first quarter.

“The resilience exhibited by the Canadian manufacturing sector since the start of 2002 will be put to the test in the months to come. The recent surge in the value of the Canadian dollar, coupled with the ongoing weakness of the US economy, may impact manufacturers that are highly dependent on export markets,” Statistics Canada commented in its Daily Bulletin.

“Additionally, the anticipation of the war in Iraq in the months leading up to April contributed to record high petroleum prices and, subsequently, to the price-inflated value of shipments for petroleum and coal products. As the war effort drew to a swift close, petroleum prices fell substantially, lessening the impact of the price-effect on manufacturing overall.”

Although the outbreak of the SARS (Severe Acute Respiratory Syndrome) virus in Toronto posed a significant blow to the health care and hospitality sectors, the impact on Canadian manufacturing seems to have been negligible to date.

Of particular concern is the health of our major trading partner. Manufacturing activity in the United States fell 2.2% in April, the largest percent decline in 14 months. April’s decrease wiped out all the gains reported in March (+1.6%).

Similar to the situation in Canada, much of April’s drop in the US was concentrated in non-durable goods industries. A 19.3% drop in shipments of petroleum and coal products contributed to a 3.5% fall in the non-durable goods sector. Manufacturers of durable goods reported a 0.9% decline in April, as a result of lower shipment activity in the transportation equipment sector.

Taking an industry-by-industry look at shipments in April, the petroleum industry led the widespread declines. Shipments of petroleum and coal products fell sharply in April, plunging 19.2% to $2.9 billion, the lowest level since November.

In April, manufacturers of motor vehicles and parts put the brakes on new shipments. Manufacturing of motor vehicle parts fell 6.8% to $2.5 billion, the third decline in a row. Slowing demand for motor vehicles in the United States and a backlog of inventories have contributed to the recent slowdown in shipments. Despite the drop in April, however, motor vehicle shipments in the first four months of 2003 are up 0.5% from the same period in 2002.

The chemical and machinery industries also reported lower shipments in April. Chemical manufacturing fell 3.5% to $3.3 billion, partly because of lower industrial prices of chemicals and petroleum.

Meanwhile, shipments of machinery decreased 4.3% to $1.9 billion.