16 August 2005

Canadian Chamber of Commerce’s Latest Economic Update

The following is extracted from the most recent economic update from the Canadian Chamber of Commerce.

Manufacturing shipments in June rebounded from a somewhat disappointing May. Shipments rose 0.5% in June from May, the second increase in shipments in five months.

If it were not for petroleum and coal products shipments -- which rose a further 6.5% in June -- the value of Canadian shipments would have slipped 0.1%. Also contributing to the gain in shipments in June were primary metal products (+3.3%) and computer and electronic products (+5.9%).

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.

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

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) which offset lower shipments in British Columbia (-$27.4 million) and Manitoba (-$22.2 million)….

Manufacturers' inventories rose another 0.3% in June, marking the 18th successive gain in inventories and the highest level since September 2001.

New orders received by manufacturers increased 0.4% 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.

In summary, manufacturing shipments in June came in pretty much in line with what had been expected. Canadian manufacturers are still hanging in despite the stronger Canadian dollar. Overall, there's nothing here to stop the Bank of Canada from raising interest rates.