OTTAWA — Sluggish activity in the transportation sector and lower prices in the petroleum and coal products market, has led to the lowest level of manufactured shipments since Dec. 2004, according to the latest Stats Canada report on manufacturing.

In September, manufacturers shipped goods worth $47.9 billion, down 3.3 percent from August. It was the second monthly decline in a row and the fastest rate of decline in shipments since August 2003.

After taking price fluctuations into account, however, the value of shipments was down just 1.2 percent to $44.1 billion, indicating that most of September’s decline in shipment value was due to lower prices, the report states.

Manufacturing in ON lost ground in 16 of 21 industries

Shipments were off in 13 of 21 manufacturing industries. Durable goods shipments tumbled 2.5 percent to $25.6 billion in the wake of the transportation sector’s third monthly decrease in a row, and sixth in the last nine months.

Non-durable goods also suffered from declining commodity prices in September as shipments fell 4.2 percent to $22.2 billion. The price of petroleum and coal products plunged 13.8 percent, their largest monthly price decline in over three years, largely due to strong inventory levels in the U.S. for gasoline and crude oil.

Canadian refineries continued to produce at slightly lower than capacity, but when combined with a price drop of 13.8 percent, shipments fell 15.3 percent to $4.7 billion.

Transportation equipment fell 2.9 percent to $8.9 billion, the third month of decline. “September was a tense month for the motor vehicle assembly industry facing the possibility of the moth-balling of excess capacity in North America,” the report states.

In spite of a relatively strong month of sales on both sides of the border, shipments in the motor vehicle industry fell 8.5 percent to $4.5 billion. At the same time, shipments for auto parts suppliers fell 4.5 percent to $2.2 billion in the wake of the auto assembly slowdown.

Food manufacturing, the lone bright spot, was no match for widespread declines and tepid gains in all other sectors. Food shipments increased 2.0 percent to $5.8 billion.

“Canadian food processors shipped a billion dollars of product more than their counterparts in the petroleum and coal industry, the first time this has happened since oil prices began to take off in February of this year,” sates the report.

ACROSS THE MAP:

Shipments fell in every other province in September — especially those provinces with a significant presence in the petroleum and coal industry.
Manufacturing in Ontario lost ground in 16 of 21 industries, with the largest decline being more than half a billion dollars in the transportation equipment industry. Most of it was in motor vehicle manufacturing, which posted a 8.2 percent in the province.

Weaker oil prices were the main factor in the 5.0 percent decline in Alberta’s manufacturing shipments, while shipments from B.C. increased 0.2 percent to $3.5 billion. Wood products remained B.C.’s number one industry, increasing by 1.2 percent.

INVENTORY-TO-SHIPMENT HIGHEST SINCE ’03:

With finished goods inventories rising 2.0 percent and shipments dropping 3.3 percent, the finished-product inventory-to-shipment ratio moved up two points to 0.46 in September, states StatsCan.

The inventory-to-shipment ratio is a key measure of the time, in months, that would be required to exhaust inventories if shipments were to remain at their current level.

Meanwhile, Canada’s battered manufacturing industry is asking Ottawa for tax breaks to help companies in what they say in a tougher global market.

The Canadian Manufacturing Coalition, representing 22 industry associations, has written to Prime Minister Stephen Harper, urging a series of tax measures, including write-offs for new investments in technology, better research and development tax incentives, and further cuts to corporate taxes.