New numbers a sign of slowing Canadian economy
Last Updated: Thursday, October 30, 2008 | 11:08 AM ET
CBC News
New numbers from Statistics Canada on Thursday gave hints that the ongoing global financial crisis is beginning to infect other parts of the Canadian economy.
The country's statistical agency said prices for manufactured products and raw materials both fell in September compared to August.
What companies received for their products as they left the factory — which is different from the final price consumers pay — slipped by 1.2 per cent in September compared to the previous month.
One reason for the falling receipts was a 4.5 per cent drop in petroleum prices, which meant the firms faced lower production costs, Statistics Canada said.
"The downward movements continued for a second consecutive month, propelled by steeply declining prices for petroleum products," the government agency said in a release.
What these firms paid for raw materials, whether from Canadian companies or foreign enterprises, also fell, dropping 7.2 per cent in the month compared to August.
Firms can benefit from falling raw material costs if they are able to keep their own selling prices stable. In this case, companies apparently saw input costs fall by a greater amount in the month than did their own out-the-factory-door price.
Still, companies often have trouble passing along cost hikes to consumers in an environment of falling prices. In addition, slipping prices are also the first indication that product demand might be dropping.
Oil production, crude prices down
In a separate release, Statistics Canada said domestic crude oil production fell 5.1 per cent in August compared to the previous August.
Crude prices have slumped badly since the beginning of the summer, from a peak in July of $147 US a barrel to the current level of less than $70. Almost 70 per cent of Canadian oil production is sold in foreign markets.
Natural gas production also fell precipitously, down 8.1 per cent in August.
Reduced production in both sectors indicates that Canada's once-buoyant oil and gas industry is heading for a significant slump.
Cattle prices fall but poultry prices up
Finally, frozen meat output might be in the second-tier of economic statistics but October's figures still show a slip in western Canada's important cattle-producing sector.
Stocks of frozen and chilled red meat fell by 10 per cent in October 2008 compared to October 2007. The reduced stocks of cattle products partially reflected falling prices in this agricultural subsector.
The price of cattle for future delivery has fallen approximately 15 per cent from their most-recent peak of $106 US per hundredweight in September. On the Chicago Mercantile Exchange, cattle now costs $91.425 per hundredweight for future delivery.
Statistics Canada said, by contrast, chicken stocks rose by 24 per cent in October compared to the same month in 2007.
In this area, prices appear to be rising.
The Chicken Farmers of Ontario said that what poultry farmers receive for their birds is up in the range of 17 per cent so far this year, depending upon the size of the chicken for sale.
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