Ottawa, ON, February 14--A recent sharp fall in petroleum prices cut the value of Canadian factory shipments in December by 0.2 percent from November, Statistics Canada said on Monday.
Analysts had forecast the value of shipments would rise by 0.5 percent from November. The December figure was the latest in a series of data to suggest the Canadian economy is starting to weaken.
"Canadian manufacturers began 2004 with a bang as order books filled and assembly lines hummed. But the tide seemed to turn as the year drew to a close," Statscan said in its daily bulletin.
It said the trend for shipments had been gradually weakening since late summer and said that in constant dollars, December's drop was the third in four months. Statscan said weakening petroleum prices were the main cause for the most recent monthly fall.
"Prices have dropped just over 10 percent in the last two months, pulling down total manufacturing shipments in December," it said, noting the value of petroleum shipments alone that month had dropped by 6.3 percent. Excluding the petroleum and coal products industries, the overall value of shipments rose 0.4 percent in December.
Finished product inventories increased 1.4 percent in December to a record high C$21.6 billion, which Statscan said could indicate manufacturers' difficulty in moving goods. The inventory-to-shipment ratio climbed to 1.25 from 1.24 in November while the backlog of unfilled orders slipped by 0.4 percent, the fifth decrease in a row.
Statscan said the strong Canadian dollar and high production costs had caused a 0.8 percent drop in manufacturing shipments in the last quarter of 2004 -- the first decline of its kind since the second quarter of 2003.
