Ottawa, ON — Canadian manufacturing continued to pick up steam in April 2004, reports Statistics Canada in its latest Monthly Survey of Manufacturing. Shipments rose 0.5% to $48.5 billion, extending the string of consecutive gains to five months, the longest since the late 1990s.
In addition, robust demand from abroad boosted manufacturers’ backlog of unfilled orders. Unfilled orders for April are up a solid 6.6% since the close of 2003.
Despite concerns that Canada’s strengthened dollar and the recent boom in petroleum prices would undermine the manufacturing sector, manufacturers have put in a stellar performance during the first four months of 2004. Year-to-date shipments were up 3.1% compared with the same period in 2003, with much of the strength coming from the big-ticket, durable goods sector.
Shipments of durable goods increased 1.1% to $27.8 billion in April, the third consecutive rise. Recent gains in aerospace and computer manufacturing, coupled with strong demand and soaring prices for wood products and primary metals, contributed to a healthy 4.7% jump in year-to-date shipments of durable goods industries. April shipments of non-durable goods slipped 0.2% to $20.6 billion, following five consecutive monthly gains.
Two-thirds of the 21 manufacturing industries, representing 82% of total shipments, posted increases in April. Quebec led the six provinces and territories reporting higher shipments. Quebec’s shipments rose 1.4% (+$164 million) to $11.6 billion, the fifth increase in a row. Resource-based industries were the main contributors, especially wood products and primary metals.
Ontario and Alberta also stepped up production in April. Led by transportation equipment and machinery manufacturing, shipments in Ontario grew $160 million (+0.6%) to $25.2 billion, following a huge gain in March (+3.8%). Alberta manufacturers posted their ninth consecutive rise in shipments, $56 million (+1.3%) to $4.3 billion. Machinery and petroleum shipments have been on a steady upswing in recent months.
On the jobs front, manufacturing employment edged up 12,000 in May, following a slight increase in April (+3,600), continuing a period of little change that began during the fall of 2003, according to the latest Labour Force Survey.
Manufacturers expressed further confidence in the economy, as many bolstered their inventories of raw materials in April. A steady stream of new orders in recent months contributed to a 1.4% rise in raw material inventories to $25.8 billion, as many manufacturers readied their factories for future production. Raw material inventories stood at their highest level since last summer.
Goods-in-process and finished-product inventories also increased in April. Goods-in-process inventories totalled $13.3 billion, up 0.9%. Finished products recouped from March’s decline (-0.5%), rising 0.6% to $20.3 billion. The trend for finished-product inventories has been improving in recent months, following an extended period of inventory reduction.
Led by increases in the fabricated metal products (+3.6%), motor vehicles (+8.5%) and petroleum and coal products (+3.3%) industries, total inventories expanded 1.0% to $59.4 billion in April, the fourth straight rise.
In April, the inventory-to-shipment ratio rose marginally to 1.23 from March’s 1.22. March’s level was the lowest on record since the start of the current series in 1992. The recent gain in shipments coupled with a slower build-up of inventories has contributed to the improvement of the inventory-to-shipment ratio in 2004.
Shipments and finished-product inventories increased at about the same pace in April, contributing to a stable finished-product inventory-to-shipment ratio of 0.42. The 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.
Several contract signings in April contributed to the fifth successive rise in new orders. Manufacturers continued to fill their books: New orders jumped 2.4% to $49.4 billion, following March’s 3.2% advance. Strong demand at home and from abroad have contributed to a positive trend for new orders since August 2003. The aerospace and fabricated metal products industries reported sizable gains in April of 140.5% and 8.2%, respectively.
A good sign of shipments to come, manufacturers reported a 2.6% increase in unfilled orders to $37.3 billion. This is the fourth increase in a row and the longest string of consecutive increases since 1999.
Unfilled orders, which had been in a steady decline since the high tech crash and the general slowdown of the global economy in 2001, have shown a modest recovery in 2004. In December, orders bottomed out at just over $35 billion. Manufacturers have since added $2.3 billion to their books in the first four months of the year.
Wide-ranging increases in unfilled orders were reported in April, led by fabricated metal products (+9.6%), machinery (+3.1%) and aerospace products and parts (+1.0%).