MRO Magazine

Manufacturing shipments edged down in June

Ottawa, ON -- Soaring petroleum prices were more than enough to boost manufacturing shipments 0.5% to $50.3 billion...


August 16, 2005
By MRO Magazine

Ottawa, ON — Soaring petroleum prices were more than enough to boost manufacturing shipments 0.5% to $50.3 billion in June 2005, according to Statistics Canada’s latest Monthly Survey of Manufacturing. This was only the second increase in shipments in five months. Excluding the petroleum and coal products industry, manufacturing shipments edged down 0.1%.

Just over half (12 of 21) of manufacturing industries posted increases in June, accounting for 44% of total shipments. Durable goods shipments grew 0.5% to $28.2 billion, following a decline of 1.3% in May. Shipments of nondurable goods advanced 0.4% to $22.2 billion, largely attributable to the increase in shipments of petroleum.

According to the StatCan’s July Business Conditions Survey, manufacturers remain wary about their short-term prospects, with 22% of manufacturers indicating they would decrease production in the third quarter. Fewer new orders, record rates of capacity utilization and inclement weather were some of the challenges facing manufacturers in recent months.

Despite volatility in various industries, manufacturing shipments have essentially plateaued since October 2004, with the trend in shipments remaining flat in June. At 1997 prices, shipments were unchanged following a 0.6% decrease in May.


Shipments were higher in six provinces in June but fell in Prince Edward Island, Manitoba, Saskatchewan and British Columbia. Wide ranging increases were reported in Quebec (+$79.5 million), Nova Scotia (+$61.7 million) and Ontario (+$46.7 million), offsetting lower shipments in British Columbia (-$27.4 million) and Manitoba (-$22.2 million).

Record high petroleum prices continued to propel petroleum and coal product shipments. Crude oil prices closed in on US $61 per barrel in the last days of June, due to speculation over rising US demand, limited production capacity and ongoing geo-political concerns. Shipments of petroleum and coal products increased 6.5% to $4.7 billion in June, the 18th rise in 20 months.

Also contributing to the gain in shipments, primary metal manufacturing rose 3.3% to $3.9 billion following four consecutive decreases. Shipments of computer and electronic products continued on a positive trend, rising (+5.9%) for the fifth time in six months to $1.9 billion.

Partially offsetting the increase in shipments were decreases reported by manufacturers of chemical products (-4.2%) and motor vehicles (-2.3%). Shipments of motor vehicles fell for the fourth time since January.

Manufacturers’ level of unfilled orders increased for the fifth time in six months, rising 0.7% to $40.3 billion in June. Unfilled orders currently stand 7.9% higher compared to June 2004.

The railroad and rolling stock (+3.6%), aerospace products and parts (+0.9%) and computer and electronic products (+1.4%) industries were the main contributors to the rise in unfilled orders in June. Unfilled orders for computer and electronic products increased for the sixth consecutive month and have now reached a level not seen since January 2003.

The rise in unfilled orders was partially offset by a 7.2% drop in the backlog of orders for motor vehicles.


Sizable gains in goods-in-process resulted in a 0.3% rise in total inventories to $64.9 billion in June. This marked the 18th consecutive rise in inventories, which now stand at the highest level since September 2001. The July Business Conditions Survey noted that just over one-quarter (26%) of manufacturers stated that their inventories were too high.

Goods-in-process inventories rose 1.3% to $14.6 billion, while inventories of raw materials were relatively unchanged (+0.1%) for the second month in a row at $28.0 billion in June.

Finished product inventories slipped 0.2% to $22.3 billion, marking only the third decrease over the last year. Manufacturers have reported a gradual build up in their finished products since early 2004.

Resource-based industries dominated the month with manufacturers of petroleum (+8.2%), primary metals (+2.1%) and wood products (+2.3%) reporting higher inventories. These industries were partly offset by decreases in chemical products (-2.5%) and motor vehicle parts (-5.2%) inventories.

The inventory-to-shipment ratio remained stable at 1.29 in June. The ratio has been slowly climbing over the past year and now stands well above June 2004’s record low of 1.21.

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


New orders received by manufacturers increased 0.4% to $50.6 billion in June, following a 0.7% decline in May. New orders have increased 4.0% so far this year compared to the first six months of 2004.

Manufacturers’ reported a surge in new orders for railroad and rolling stock in June. The machinery industry and the primary metal product industry also reported increases in new orders. New orders for motor vehicle industry were down 3.4%.