Following a year of significant inventory reductions, manufacturers may be showing signs of confidence in the economy. In recent months, inventories have started to gradually accumulate once again. In July, inventories increased for the third time in four months, rising 0.6% to $62.1 billion, a five-month high, according to Statistics Canada.
This supports the data from July’s Quarterly Business Conditions Survey, which indicated that manufacturers were satisfied that their inventories were under control.
While Canadian manufacturers began to rebuild their inventories, their counterparts in the United States continued to maintain the more conservative approach of inventory reductions. Although inventories slipped just 0.1% in July, the US manufacturing sector has steadily reduced stock holdings since early in 2001.
In Canada, July’s inventory increase was concentrated in raw material inventories, which jumped 1.7% to $27.4 billion, the highest since November 2001. Goods-in-process inventories edged up 0.4% to $15.9 billion. Finished-product inventories retreated 0.9% to $18.9 billion, the lowest level in two years. Finished products have been steadily decreasing since their peak of $20.2 billion in June 2001. The trend for finished products remained stable for the fourth straight month.
Manufacturers in the pharmaceutical and medicine industry contributed to the 2.5% advance in chemical product inventories in July. Inventories reached $5.3 billion, closing in on October 2001’s record high. The machinery industry reported its first inventory increase in five months, as stocks edged up 1.2% to $4.6 billion. Inventories of petroleum and coal products rose 3.3% to $1.6 billion, recovering from decreases in May and June.
Slightly offsetting these increases, the aerospace product and parts industry reported its second decrease in three months, as inventories fell 0.6% to $7.8 billion. Ongoing uncertainty in the global aerospace market continued to impede this industry.
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