OTTAWA, Ont. — Carriers concerned about the impact of the strong Canadian dollar on the fortunes and subsequently the freight volumes – of their manufacturing customers can rest easy for another quarter.

Manufacturers enjoyed a profitable first quarter the latest Statistics Canada data indicates. This despite the effects of the strong Canadian dollar on export prices and higher production costs associated with rising energy prices.

The Canadian dollar eased back over the past few months following decade-high levels in January. Overall, manufacturing profits increased 13.5% to a four quarter high of $10.2 billion, despite an operating revenue slide of 0.7%. Excluding a decline by the manufacturers of motor vehicles and parts, however, manufacturing revenue increased 1.0% in the quarter.

Petroleum and coal producers posted the strongest profit gain in the manufacturing sector, as their profits swelled 34.3% to $1.6 billion. Refined oil prices increased with the rising crude prices, but both remained significantly below the first quarter peak levels of last year. Domestic and foreign demand for refined petroleum products were solid in the quarter.

Chemical manufacturers saw their profits rise 21.7% to $1.4 billion. Most of the gains were associated with improved efficiencies in controlling costs, as profit margins were much improved despite little growth in revenue and prices.

Wood and paper manufacturers reported a third straight rise in operating profits. Profits of $1.0 billion were 13.0% above fourth quarter levels, and were almost triple those earned in the second quarter of 2003. Wood prices strengthened on the heels of sustained demand from the North American housing sector. Meanwhile, pulp and paper markets picked up and prices improved throughout the quarter.

Thriving domestic and international demand triggered revenue and profit growth in the primary metals industry. Profits jumped 28.2% to $0.4 billion, propelled by a 3.7% increase in revenue. Demand for steel from the oil and gas industry accelerated, as exploration companies expanded drilling activity. The Monthly Survey of Manufacturing recently reported that demand for raw steel by China is skyrocketing, raising concerns about possible shortages. Prices for most metals showed healthy increases in the quarter.