billion in March on the heels of a similar decline in February.

Inventories hovered at near record levels for several months near the end of&nbsp ; 2006&nbsp ; before easing slightly in the new year.

Overall,&nbsp ; 11&nbsp ; of&nbsp ; 21&nbsp ; industries decreased their inventories in March, with most of the decrease coming from motor vehicle parts (-4.9%), aerospace products and parts (-1.8%), and the primary metal sectors (-1.2%). The one major exception to inventory declines came from petroleum and coal product manufacturers, who gained&nbsp ; 2.7%.

Inventory-to-shipment ratio trending slowly downward
After peaking at a three year high of&nbsp ; 1.33&nbsp ; in October&nbsp ; 2006, the inventory-to-shipment ratio has decreased slowly, sliding to&nbsp ; 1.25&nbsp ; in March from&nbsp ; 1.29&nbsp ; in February. March’s ratio was at the lowest level since January&nbsp ; 2006.

The inventory-to-shipment ratio is a key measure of the time, in months, that would be required to exhaust inventories if shipments were to remain at their current level. ground lost in recent months as shipments bounced back&nbsp ; 3.6% to&nbsp ; $24.4&nbsp ; billion in March, the first increase since December. The first quarter of&nbsp ; 2007&nbsp ; has been lacklustre as shipments declined&nbsp ; 1.8% compared to the same quarter in&nbsp ; 2006.

In March, motor vehicle manufacturing contributed to Ontario’s boost in shipments. Assembly lines were busy as some newer models proved to be popular in North America. In addition, a major refinery returned to full production in March following the disruption caused by a fire in February.

Production of aerospace products and parts dominated Quebec’s manufacturing sector in March. Overall, shipments rose&nbsp ; 2.2% to&nbsp ; $12.0&nbsp ; billion, following a healthy&nbsp ; 2.5% jump in February. Quarterly shipments were on par with the first quarter of&nbsp ; 2006&nbsp ; (+0.2%).
Strong demand and soaring prices also contributed to increases in Quebec’s petroleum and primary metals industries.

Manitoba’s manufacturers posted a very strong month as shipments jumped&nbsp ; 11.5% to&nbsp ; $1.4&nbsp ; billion. Again, strong demand and rising prices contributed to big gains in Manitoba’s primary metals industry. In addition, healthy increases were also reported in the transportation equipment and miscellaneous industries. First quarter shipments jumped&nbsp ; 14.5% in Manitoba compared to the same quarter in&nbsp ; 2006, one of the strongest quarterly gains in the country.

New orders ease back
New orders decreased&nbsp ; 1.4% to&nbsp ; $50.2&nbsp ; billion, easing slightly from the recent high of&nbsp ; $51.0&nbsp ; billion in December. Despite the decline in March, new orders remained strong in the first quarter of&nbsp ; 2007, increasing by&nbsp ; 1.7% compared to the final quarter of&nbsp ; 2006.

Gains and losses for new orders were evenly split between reporting industries. The transportation equipment sector posted the most sizeable decrease in March, with new orders dropping&nbsp ; 8.6% following a&nbsp ; 12.8% increase the previous month.

The largest decrease within the transportation equipment sector came in the aerospace products and parts sector, which plummeted&nbsp ; 42.0% after a huge&nbsp ; 71.1% surge in orders the previous month. Due to the high value of goods produced by the aerospace industry, monthly swings of hundreds of million dollars are not unusual. However, the decrease overwhelmed some moderately strong gains in new orders seen elsewhere within the sector, such as motor vehicles which increased&nbsp ; 6.5%, and motor vehicle parts, up&nbsp ; 5.6%.

Unfilled orders remain at five-year high
Unfilled orders edged up&nbsp ; 0.2% to&nbsp ; $46.7&nbsp ; billion in March, remaining at the highest level since&nbsp ; 2001.

Unfilled orders in the transportation equipment industry remained virtually unchanged as a whole compared to February. However, this masked some variability within the transportation sector. Unfilled orders rose for the tenth consecutive month in the aerospace industry, partly as a result of a huge jump in new orders in February. This was offset by a decrease in unfilled orders for the motor vehicle and motor vehicle parts industries.

Within the machinery sector, unfilled orders continued to increase in March, with a&nbsp ; 1.0% rise. This was the fifth consecutive monthly increase in unfilled orders for machinery, and the highest level recorded since the beginning of&nbsp ; 2000.

As many industries do not carry a balance of unfilled orders from month to month, the transportation equipment sector typically accounts for slightly over half of all unfilled orders in the manufacturing sector.

Inventories continue to edge down
Inventories continued to be drawn down following the end of the rail strike in February. Total inventories for manufacturers fell&nbsp ; 0.2% to&nbsp ; $62.7&nbsp ;Release taken from Statistics Canada.&nbsp ; All dollars are Canadian.

Canadian manufacturers had a strong March, following a slight increase in factory shipments in February, as previous supply disruptions caused by the rail strike and the refinery fire in Ontario were rectified.

In March, manufacturers shipped goods worth an estimated&nbsp ; $50.1&nbsp ; billion (Canadian), representing a&nbsp ; 2.8% gain over the previous month. For the first quarter, shipments were up&nbsp ; 1.0% compared to the fourth quarter of&nbsp ; 2006.

Using constant dollars, which take price fluctuations into account, the volume of shipments rose&nbsp ; 1.6% to&nbsp ; $45.1&nbsp ; billion, the fourth increase in five months.

Shipments advanced in&nbsp ; 15&nbsp ; of&nbsp ; 21&nbsp ; manufacturing sectors, representing about&nbsp ; 78% of total output.

Both durable and non-durable goods saw shipments increase in March. The petroleum and coal products industry continued to heavily influence the direction of non-durable shipments, with a&nbsp ; 2.2% increase in non-durable goods to&nbsp ; $22.4&nbsp ; billion. Durable goods increased&nbsp ; 3.3% on the back of strong automotive and aerospace production.

After a slight increase in February, the transportation equipment sector surged&nbsp ; 7.5% in March, recovering from the sharp loss recorded in January. Shipments increased to&nbsp ; $10.4&nbsp ; billion, slightly exceeding the recent high reached in December&nbsp ; 2006.

Unfilled factory orders, an indicator of probable future shipments, remained virtually unchanged from February, edging up&nbsp ; 0.2% and remaining at the highest level since November&nbsp ; 2001. New orders slipped&nbsp ; 1.4% in March, giving up some of the gains from the previous month.

According to the Labour Force Survey, manufacturing employment edged up slightly in March after having dipped in February. In general, employment levels in the manufacturing sector have remained fairly stable over the past eight months.

Motor vehicle and aerospace manufacturers rev up in March
Transportation equipment shipments were up sharply in March, following a slight increase in February. The strongest increase was a&nbsp ; 13.4% jump in production of aerospace products and parts. Other than a&nbsp ; 13.0% drop in January, shipments have increased in four of the past five months.

The automotive sector also bounced back with the end of the rail strike and with new-model production kicking into gear. Motor vehicle shipments increased&nbsp ; 7.2% while shipments of motor vehicle parts gained&nbsp ; 4.3% in March. Overall, shipments in the motor vehicle sector increased about&nbsp ; $475&nbsp ; million.

Other areas which likely benefited from a return to normalcy in rail services included chemical products and non-metallic mineral products. Chemical product shipments gained&nbsp ; 1.0% in March after slipping&nbsp ; 1.9% in February. Similarly, non-metallic mineral shipments increased&nbsp ; 3.9% after having dropped&nbsp ; 4.8% during the previous month.

Other areas posting notable increases in shipments included the petroleum and coal product sector (+9.3%) and the primary metal sector (+2.3%). However, price was a factor for both of these industries. Petroleum and coal product prices jumped&nbsp ; 8.9%, accounting for almost all of the increase in value of shipments. Prices within the primary metal sector were also higher, gaining&nbsp ; 3.8% according to the Industrial product and raw materials price indexes. Export demand in Asia continued to be very strong, driving up the prices for products such as nickel and copper.

Strong gains in Central Canada
In March, eight provinces posted higher shipments with much of the strength concentrated in Central Canada.

Ontario’s manufacturers made up some