OTTAWA, Ont. — In the first 11 months of the year, manufacturing shipments have declined 1.3% from the same period of 2002. This was in sharp contrast to the United States, Canada’s largest trading partner.
"The SARS virus, BSE (mad cow disease), forest fires, and the soaring value of the dollar Canadian were among several hurdles facing the Canadian economy in 2003," commented Statistics Canada in its Daily Bulletin yesterday.
South of the border, however, shipment activity is showing distinct signs of a resurgence following sluggish economic growth in recent years.
Several sectors of the US economy, manufacturing included, posted strong gains in 2003. From January to November, US shipments rose 2.2% from 2002, increasing in six of the last seven months. Unfilled orders have been on a steady rise since August.
While the US economy appears to be on the road to recovery, there are concerns that the strengthening value of the Canadian dollar may curb demand for Canada’s manufactured goods. In November, the dollar closed in on a ten-year high of 77 cents against the US greenback, up almost 20% since the start of the year. Just over 50% of Canada’s manufactured outputs are destined for international markets.
Several economists had predicted the Canadian dollar would start to drop in the first quarter of this year. Not only has this not transpired as yet but the Bank of Canada’s action this week to reduce interest rates failed to have any immediate impact on a surge in the loonie’s value.
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