Manufacturers preparing to decrease production in second quarter

Concerned with lower levels of new and unfilled orders, manufacturers expect to decrease production levels in the coming three months, Statistics Canada reported today.

Key factors influencing the manufacturers’ intentions this quarter include global uncertainty and the appreciation of the Canadian dollar.

Manufacturer’s growing pessimistic mood was noted in Statistics Canada’s quarterly Business Conditions Survey. Almost 4,000 responded to the voluntary survey, which requests manufacturers’ opinions on production impediments, finished product inventory levels, new and unfilled order levels, production and employment prospects in the coming three months.

In April, 31% of manufacturers stated they would decrease production in the second quarter, while only 19% expected to increase production, leaving the balance of opinion at -12. In addition, 12 of the 21 major industry groupings, representing 60% of manufacturing shipments, indicated a negative outlook for the second quarter of 2003.

Producers in the transportation equipment, computer and electronic product and primary metal industries were the major contributors to the 21-point drop in the balance of opinion from January. This is the largest balance decrease since a 31-point drop in January 2001.

The balance of opinion is determined by subtracting the proportion of manufacturers that stated production would decrease in the coming three months from the proportion who stated production would be increasing.