Manufacturing sales started the year with only a 0.2 percent rebound, half as much as expected by forecasters. Excluding motor vehicles and parts, sales even fell 1.2 percent. However total sales in volume terms rose 1.1 percent, showing that much of the weakness was price related in January.

Inventories contracted 0.2 percent on the month, with the inventory-to-sales ratio unchanged at 1.72. Looking ahead, new orders fell 3.1 percent and unfilled orders were down 1.3 percent on the month, not promising for manufacturing activity ahead.

The unadjusted capacity utilization rate rose to 77.1 percent in January from 75.1 percent in December, but was down from 78.5 percent a year earlier.

Looking at the sales breakdown, the picture was mixed. Gains were led by a 0.8 percent advance in non-durable goods industries, while durable goods decreased 0.3 percent.

Overall, 11 of 21 subsectors posted gains led by a 4.3 percent advance in transportation equipment, including a 19.6 percent surge in motor vehicles as production resumed following a slowdown related to retooling. Also leading sales higher on the month was a 3.5 percent increase in chemicals. Machinery was up 0.4 percent, an indication of slow investment activity. Petroleum and coal products fall 1.3 percent.

Regionally, Ontario posted the largest increase over the month, while Quebec recorded the largest decline.

After falling 0.7 percent in December that, however, followed a 1.5 percent rise in November, manufacturing sales in January are expected to rise 0.4 percent.

Manufacturing sales for twenty-one reporting industries are the Canadian dollar level of factory shipments for manufacturing durable and nondurable goods. Volume figures are also provided. The sales statistics form part of a wide monthly report that encompasses information on new orders, backlogs and inventories and is a key input into forecasts of monthly gross domestic product (GDP).

Manufacturer's shipments represent the monetary level of factory shipments for durable and nondurable goods and are a relevant indicator for an export-oriented economy. The data are used by analysts to evaluate the economic health of manufacturing industries. They are also used as inputs to GDP and needless to say, these data are used by the central bank in its decision-making process.

The monthly survey of manufacturing of which shipments is a part, provides a broad look at manufacturing activity levels. The level of activity in manufacturing can be affected by the level of interest rates which slows or stimulates the demand for goods and production. Shipments are an indication of how busy factories have been as manufacturers work to fill orders. The data not only provide insight to demand for items such as refrigerators and cars, but also business investment such as industrial machinery, electrical machinery and computers. Because a large proportion of shipments are headed south of the border to the U.S. and include a wide variety of durables, shipments are affected by U.S. economic activity as well as the exchange rate. Although the focus in this report is on shipments, it also contains information on inventories and new and unfilled orders.

Results from this survey are used by both the private and public sectors including finance departments of the federal and provincial governments, the Bank of Canada, Industry Canada, the System of National Accounts, the manufacturing community, consultants and research organizations in Canada, the United States and abroad.