For the first time since July 1998, manufacturers expect to decrease production

by Canadian Shipper

There is yet another concrete sign that the economy is about to cool down. Statistics Canada’s Quarterly Business Condition Survey of manufacturing found that 43 percent of manufacturers planned to decrease production in the first quarter, while only 15 percent expected to increase production.

This is the first negative balance seen since July 1998.

Manufacturers in the transportation equipment and primary metals industries accounted for almost all of the decrease, according to Statistics Canada.

The government agency also reports that the number of manufacturers who stated that orders were declining increased to 48 percent in January from 18 percent in October. Again, manufacturers in the transportation equipment and primary metals industries were the major contributors to the decrease.

And 35 percent of manufacturers said their level of unfilled orders was lower than normal and only 11 percent said it was higher than normal. The major contributor to the decrease in the balance was the primary metals industry.

The Business Conditions Survey is conducted in January, April, July and October. The results are based on replies from about 4000 manufactures and are weighted by a manufacturer’s shipments or employment. Consequently, larger manufacturers have a correspondingly larger impact on the results than do smaller manufacturers.

Finally, in the January Business Conditions Survey, some 31 percent of manufacturers said their the current level of finished products inventory was too high, up from 17 percent in October.

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