Canadian Manufacturers Positive About Production Prospects

Release taken from Statistics Canada, www.statcan.ca
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Manufacturers were more upbeat about their current situation and prospects for production and employment for the second quarter of  ; 2007, according to the April Business Conditions Survey.
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The Business Conditions Survey is a quarterly survey that requests manufacturers' opinions on production impediments, finished product inventory levels, new and unfilled order levels and production and employment prospects in the coming three months. The voluntary survey was conducted in the first two weeks of April and attracted over  ; 3,000  ; responses from manufacturers.
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Manufacturers positive about production prospects
In April, 22% of manufacturers stated they would increase production over the next three months, a  ; 4  ; point rise from the January survey. At the same time, manufacturers indicating they would decrease production in the second quarter dropped  ; 7  ; points to  ; 16%.
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As a result, the balance of opinion stood at +6, an  ; 11  ; point improvement from January. This was the first time the balance of opinion for production prospects moved into positive territory since October  ; 2005  ; (+1) and was the most positive balance since October  ; 2004  ; (+10). The improved production prospects were attributed mostly to manufacturers in Ontario. While most other provinces posted a positive balance, opinions reported by manufacturers in Quebec and Alberta remained negative.
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Producers of computer and electronic products, transportation equipment and electric equipment, appliance and components industries were the major contributors to the positive balance. In all,  ; 12  ; of the  ; 21  ; manufacturing industries posted a positive balance for production prospects in the second quarter of  ; 2007.
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The balance of opinion was determined by subtracting the proportion of manufacturers who expected production would be decreasing in the coming three months from the proportion who expected production would be increasing.
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Satisfaction with level of new orders continues to increase
While  ; 22% of manufacturers stated the current level of new orders was increasing, those stating the level of new orders was decreasing fell  ; 12  ; points to  ; 10%. As a result, the April balance of opinion increased  ; 9  ; points from the January survey to +12. This represents the most positive balance of opinion regarding the current level of new orders since October  ; 2004  ; (+13). The improvement in the balance was widespread as  ; 13  ; of the  ; 21  ; industries indicated greater satisfaction with current levels of new orders.
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Producers in petroleum and coal products and electric equipment, appliance and components were the major contributors to the improved balance of opinion for orders received. According to February's Monthly Survey of Manufacturing, new orders for all manufacturing industries increased  ; 1.9% to just over  ; $50.7  ; billion.
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Manufacturers' satisfaction with levels of unfilled orders improved
While most manufacturers continued to describe the backlog of unfilled orders as normal, the April balance of opinion increased  ; 10  ; points to zero. Some  ; 16% of manufacturers indicated that the current level of unfilled orders was higher than normal and  ; 16% claimed a lower than normal backlog.
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Producers in the transportation equipment and computer and electronic products industries were the major contributors to the improved unfilled orders balance of opinion. The balance of opinion for unfilled orders had been negative since October  ; 2004. According to February's Monthly Survey of Manufacturing, unfilled orders jumped  ; 4.9%

to almost  ; $46.8  ; billion, an increase of almost  ; $2.2  ; billion over the previous month.
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Manufacturers slightly less concerned with finished product inventories
In April,  ; 78% of manufacturers reported that the current level of finished product inventories was about right, up  ; 1  ; point from January. Some  ; 17% stated that inventories were too high, while  ; 5% said inventories were too low. This left the balance of opinion at -12, a  ; 5  ; point improvement from the January balance. According to February's Monthly Survey of Manufacturing, finished product inventory levels stood at over  ; $22.2  ; billion, down only slightly from January.
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Manufacturers' employment prospects are positive
The April balance of opinion for employment prospects for the next three months stood at +2, a  ; 6  ; point improvement from the January survey and the first positive balance since April  ; 2005  ; (+3). Some  ; 68% of manufacturers stated that they would keep their current work force,  ; 17% indicated they would increase it and  ; 15% indicated that they expected to decrease employment in the second quarter of  ; 2007.
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Regionally, negative balances in Ontario (-4) and Quebec (-4) were offset by positive balances in the remaining provinces, where manufacturers continued to express difficulty in finding skilled labour. According to the March Labour Force Survey, the manufacturing sector employed just over  ; 2.08  ; million people representing a slight increase over February.
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Manufacturers report greater production impediments
The number of manufacturers reporting production impediments increased  ; 6  ; points to  ; 29% in the April survey. Concern with the labour dispute in the rail industry was responsible for most of the increase, while skilled and unskilled labour shortages were also among the factors cited.