Manufacturing shipments rise on price gains

July 16, 2008
Financial Post
Written by: Jamie Sturgeon

Mark Blinch/ReutersA view of distillation columns, where alcohol is separated from the water and solids within corn, at the GreenField Ethanol plant in Chatham, Ontario, April 10, 2008.

Rising prices propelled manufacturing sales up 2.7% in May from April, marking the biggest increase in more than a year, Statistics Canada said on Wednesday.

The rise easily beat economists' expectations of a 0.5% increase. It also marked the the fourth increase in five months.

In total, manufacturing sales were $47.2-billion for May.

Yet the numbers are a bit deceiving. When using 2002 prices, thereby factoring out inflation, sales edged up 0.2%.

Energy-related products such as petroleum and coal accounted for almost half of the growth, the government agency reported.

Rising prices accounted for a 9.2% jump in sales for energy products. Since March, the price for such products has climbed about 17%.

Primary metal sales also rose 3.1% for the month. Price increases were a factor here too, but strong exports for copper, iron and steel also helped boost sales.

In all, 16 of 21 industries saw higher sales, Statscan said.

Textiles products fell the steepest - sales declined 13.1% in May, as Canadian clothing manufactures continue to face intense international competition.

Geographically, Prince Edward Island was the only province to record a decrease, down 11.7%. Beleaguered manufacturers in Ontario got some good news, with a rise of 2.1% for the month.