Canadian manufacturers' optimism in the last two quarters waned as they looked ahead to the final three months of  ; 2007. According to the October Business Conditions Survey by Statistics Canada, manufacturers indicated heightened dissatisfaction with the level of orders received, while production prospects weakened.
Although they remained positive in the fourth quarter of  ; 2007, manufacturers were more guarded as they continued to face important labor shortages, coupled with ongoing pressures caused by the Canadian dollar reaching parity with the U.S. greenback.
Manufacturers' outlook on production prospects weakens In October, the proportion of manufacturers stating they would increase production over the next three months stood at  ; 25%, up  ; 3  ; points from July. This was largely offset by  ; 23% of manufacturers stating they would decrease production, which was up from  ; 15% in July. As a result, the balance of opinion stood at +2, a decrease of  ; 5  ; points from the previous survey.
Although lower, this was the third consecutive positive balance in  ; 2007. Continuing positive production prospects were posted in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, Ontario, Manitoba and Saskatchewan, while opinions in the remaining provinces were negative.
Producers in transportation equipment, machinery and electric equipment, appliance and components industries were the major contributors to the positive balance. In all,  ; 10  ; of the  ; 21  ; manufacturing industries posted a positive balance for production prospects in the fourth quarter of  ; 2007.   ; 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.   ; Satisfaction with level of new orders down In October, the balance of opinion concerning current levels of new orders dropped  ; 9  ; points from the July survey to -3. The proportion of manufacturers who stated that orders received were declining edged up  ; 3  ; points to  ; 22% in October. In contrast, those stating new orders were rising fell  ; 6  ; points to  ; 19% in October.   ; Although negative, the balance of opinion remains higher than the -13  ; posted one year earlier in the October  ; 2006  ; survey. Producers in primary metal, paper, wood, and computer and electronics products industries were the major contributors to the lowered balance of opinion for orders received. According to August's Monthly Survey of Manufacturing, new orders for all manufacturing industries dropped  ; 5.0% from July to just under  ; $51.2  ; billion. Manufacturers less satisfied with levels of unfilled orders In October,  ; 76% of manufacturers described the backlog of unfilled orders as normal, a  ; 6  ; point increase from July. The October balance of opinion declined an additional  ; 4  ; points to -9, largely due to a smaller proportion of manufacturers (8%) indicating that the current level of unfilled orders was higher than normal.   ; Meanwhile,  ; 17% reported a lower than normal backlog, comparable to the previous two quarters. Producers in the wood and paper industries were the major contributors to the negative unfilled orders balance of opinion. With the exception of the April survey, the balance of opinion for unfilled orders has been negative since October  ; 2004, reaching a low of -23  ; in April  ; 2005.   ; According to August's Monthly Survey of Manufacturing, unfilled orders posted a slight decrease of  ; 0.1% to almost  ; $54.9  ; billion, the first decline in  ; 12  ; months. Currently, the backlog of