Rising raw materials build up total inventories

Inventories continued their upswing of recent months, rising 0.3% to $58.8 billion in March, a six-month high, according to the latest Statistics Canada numbers, released today.

A 0.8% boost in raw materials ($25.4 billion) was the main contributor.

In 2003, raw material inventories were cut extensively. Following the recent shipment gains of 2004, manufacturers appear to be cautiously anticipating further opportunities to boost production, and have started to accumulate raw materials. The trend for raw materials has been gradually improving since last autumn.

Meanwhile, goods-in-process inventories inched up by 0.2%, as finished products fell back 0.4% to $20.2 billion.
This marked the 10th decline in finished-product inventories in the last 11 months. Despite the recent string of declines in finished products, some manufacturers (17%) still feel their finished-product inventories remain too high, according to the Quarterly Business Conditions Survey for April.

Motor vehicles (+10.5%), petroleum and coal products (+3.2%) and fabricated metal products (+1.7%) manufacturing were the principal industries reporting higher inventories in March.