Monthly Survey of Manufacturing

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Following a strong gain in March (+3.0%), manufacturing shipments edged down in April. Shipments decreased by 0.6% to an estimated $49.7 billion.

Excluding the motor vehicle parts and accessory industries, manufacturing shipments increased 1.0% in April.

At 1997 prices, shipments rose 0.5% to $45.0 billion. The constant dollar measurement takes price fluctuations into account. This was the fifth volume advance in six months.

Shipments declined in 12 of 21 manufacturing industries, which represent about 51% of total output.

Shipments of non-durable goods increased for the third consecutive month in April, rising 0.7% to $22.5 billion. Durable goods dropped 1.7%, as shipments by automotive and aerospace products manufacturers slipped after a robust March. The decrease in durable good shipments was only the second negative result in the last seven months.

Shipments in the transportation equipment sector plunged 7.6% in April, offsetting most of the 8.6% advance posted in March. Excluding the transportation sector, shipments were positive for the most part, led by primary metals and petroleum and coal products.

New orders showed strength, increasing 0.8% in April after slipping 0.4% in the previous month. Meanwhile, unfilled factory orders, an indicator of probable future shipments, remained robust with a 1.9% gain.

Transportation equipment shipments fall back after surge in March

Transportation equipment shipments reversed direction in April, giving up the sizeable gains realized in March. Shipments of motor vehicles tumbled 11.1% to $5.0 billion after a jump of 8.7% to $5.7 billion the previous month. Shipments had surged in March following a rail strike that had affected motor vehicle manufacturers in February. In addition, after a strong March due to quarter-end production, the aerospace products and parts industry decreased 6.4% in April.

On a positive note, continued demand in Asia for primary metal products pushed both shipments and prices higher in April. Shipments of primary metal products rose 5.9% in April to $4.8 billion, the highest level on record. This was the third consecutive monthly increase, after a period of relative stability in the latter half of 2006. Prices for primary metals accounted for some of the increased value of shipments in April, rising 1.1% from March.

Shipments by petroleum and coal product manufacturers remained very strong, advancing 4.5% from March to a level not seen since August 2006. Most of the gain can be attributed to a 3.6% price increase on rising demand and ongoing concerns in the Middle East.

Provincial results split in April

The provinces were evenly split in April as substantial declines in Ontario and Manitoba were partly offset by higher shipments in Quebec and British Columbia.

Following March's 4.0% surge, Ontario's manufacturers posted a 2.0% decline (-$490 million) to $23.9 billion in April. Shipments had been stronger than normal in March, due to the end of a recent rail strike that had impeded some industries in February. As a result, Ontario's motor vehicle and parts manufacturers were among the top contributors to April's decline.

Manitoba's manufacturing sector also gave back most of March's considerable gains (+11.8%), as shipments tumbled 10.4% (-$147.9 million) to $1.3 billion. Shipments had spiked in March on the strength of several industries, all of which have since returned to more normal levels. Primary metals and transportation equipment were the main contributors to the decline.

Offsetting Ontario and Manitoba, shipments in Quebec advanced 1.5% (+$184 million) to $12.2 billion, the third successive increase. Healthy demand and rising prices boosted the primary metals and petroleum products industries.

Resource-based industries were also the primary contributors in both British Columbia (+2.2%) and Saskatchewan (+7.8%).

Seven months in a row: Unfilled orders continue upward

As a result of robust growth in April, unfilled orders were up 1.9% to $47.6 billion, their highest level since November 2001. This marked the seventh consecutive monthly increase. Unfilled orders have been slowly improving following a slight cool down in the summer of 2006.

Heightened demand for both military and civilian aircraft and parts was the main contributor to the increase in April and fuelled much of the strong performance in the first quarter of 2007. Orders for aerospace products jumped 2.7% to $20.2 billion. This represented the highest level for the industry since the summer of 2002, up 46% over April 2006.

Other major contributors to the growth in unfilled orders were computers and electronic products (+7.5% to $3.5 billion) and fabricated metal products (+3.9% to $4.8 billion).

New orders show modest increase

New orders showed a modest upturn in April, increasing 0.8% to $50.5 billion after a slight dip in March (-0.4%). April marked the second highest level in the past 18 months, the highest being a $51.0 billion peak seen in December 2006.

Computer and electronic products led the pack in April, with a sharp increase of 24.9% to $1.7 billion. This was the strongest performance for the sector since April 2005, and was partly due to new contracts in the navigational, measuring and control instruments industry. Other strong contributors to the increase included fabricated metal products (+7.2%) and primary metals (+7.1%).

Decreases were driven primarily by the automotive related industries, which are typically the largest source of new orders nationally. Both motor vehicles (-8.7%) and automotive parts (-3.9%) pulled back after experiencing a surge in new orders in March (+8.0% and +5.7% respectively).

Inventories: Only the second increase in the past six months

Manufacturer's total inventories increased for the first time in three months, advancing 0.7% to $62.8 billion. Despite the slight increase in April, inventories have been trending down slowly over the past six months after hovering at near record levels for several months in the fall of 2006.

Overall, 15 of 21 industries reported an increase to their inventories in April. Petroleum and coal product inventories increased 4.8% to a record high level of $3.8 billion, despite prices being only 1.0% higher than in April 2006. Before the recent surge, inventories had remained fairly stable throughout 2006 after rising steadily in 2005.

Other notable increases to inventories came from chemical product manufacturers and the aerospace products and parts sector, as both reported a 1.5% rise in inventory levels.

Compared to the United States, Canadian manufacturers' inventory levels have remained relatively stable over the past few years. Inventory levels in Canada were only 2.4% higher than in April 2004. In the United States, however, the manufacturing sector has seen significant growth in inventory levels during the same period, rising 23.7% over the past three years.

Inventory-to-shipment ratio remains steady

The inventory-to-shipment ratio remained virtually unchanged in April at 1.26. The ratio had reached a recent low of 1.25 in March after peaking at a three-year high of 1.33 in October 2006.

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.

Available on CANSIM: tables 304-0014, 304-0015 and 377-0008.

Definitions, data sources and methods: survey number 2101.

All data are benchmarked to the 2004 Annual Survey of Manufactures.

Data from the May Monthly Survey of Manufacturing will be released on July 16.

For general information or to order data, contact the dissemination officer (toll-free 1-866-873-8789; 613-951-9497; fax: 613-951-9499; manufact@statcan.gc.ca). To enquire about the concepts, methods or data quality of the release, contact Elton Cryderman (613-951-4317, elton.cryderman@statcan.gc.ca), Manufacturing, Construction and Energy Division.

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