The state of Canadian manufacturing looks better with Statistics Canada reporting that manufacturers “put in a solid effort in July, following a dismal second quarter. Widespread increases contributed to a 1.7% rise in shipments to $43 billion.”

Led by motor vehicle manufacturing, 16 of 21 industries, representing three-quarters of total shipments, reported increases in July, says StatsCan. “The breadth of July’s increase was encouraging, since the Canadian economy has faced several setbacks in recent months.”

BMO Nesbitt Burns calls the reading “a welcome relief after three straight declines during a dismal second quarter”. Still, it notes that shipments remain 1.6% below year-ago levels. Higher exports and rising industrial prices also helped boost activity in July, Nesbitt says.

“Today’s data comes as very welcome news, indicating that Canada is benefiting from stronger third quarter growth numbers south of the border,” says RBC Financial. “Both increased export demand from the U.S., as seen in July’s trade surplus numbers, as well as higher export prices have contributed to this increase.”

“Another encouraging sign in the report was the second straight pick-up in new orders, which rose a healthy 2.1% in July, a touch better than the 2.0% increase in June. Inventories fell 0.3%, and the inventory-to-shipments ratio fell to 1.46, a better reading, but still quite high,” Nesbitt notes.

RBC says that the only downside to today’s report was seen in the unfilled orders number, which fell for the 11th straight month, contracting 1.2%. Nesbitt notes that unfilled orders have fallen by 16.1% from a year ago. “Thus, new orders are being filled by current production and out of inventories, rather than providing support for future production activity,” it says.

“Canadian manufacturing activity rebounded in July, starting the third quarter out on a much better note than the dismal Q2 results. However, inventories remain too high, and unfilled orders continue to slide, raising questions about future gains in manufacturing activity,” Nesbitt concludes.