Transportation and warehousing hit hard as key clients reduce production

The economy experienced its first contraction since the events of September 11, 2001 in April and the transportation and warehousing industries were particularly hard hit.

Canadian gross domestic product (GDP) fell 0.2% in April, Statistics Canada reported Friday. Transportation and warehousing GDP fell by 0.7% – its first drop since a 0.2% decline in November 2002. The previous month, GDP for the transportation and warehousing industries grew an anemic 0.1%.

The dip in the fortunes of transportation and warehousing companies is attributable to the continued problems experienced with industrial production, which includes key customers in the manufacturing and mining industries.

Industrial production in April fell a further 0.8%, the third consecutive monthly decline.

Manufacturing output decreased 0.4%, its second drop over the last three months. Although lower production levels were extensively reported among manufacturers, durable goods manufacturers were responsible for much of the weakness. Primary metal manufacturers suffered the largest setback, as production problems at a uranium mine significantly hampered output in the mining sector and subsequent uranium processing in the manufacturing sector.

Manufacturers of information and communication technologies (ICT) reduced output a further 1.9%, reaching their lowest output level since the fall of 1998. Makers of computers and semiconductors both eased back their output levels in April, while communication equipment manufacturers regained some strength as a result of new product offerings and new contracts.

A drop in aircraft and aircraft parts production, as well as sluggish motor vehicle parts output, overshadowed the robust gains registered by the car and truck industry.

Production was pared back for the third consecutive month in the motor vehicle parts industry, mirroring the uncertainty in North American production of cars and trucks. In contrast, motor vehicle manufacturers increased production levels of cars and trucks, partly the result of the termination of a labour dispute in this industry.

Manufacturers of heavy trucks ramped up production levels 36%, almost restoring output to pre-strike levels in December and resulting in increased exports of trucks in April.