Factory shipments fell for the first time in three months in January as petroleum refiners and manufacturers of transportation equipment, principally automobiles, extended maintenance down-time into the New Year, Statistics Canada reported today.

Separately, StatsCan said Canada’s net external liabilities fell to their lowest level in more than a quarter-century during the last three months of 2006, the result primarily of a weakening Canadian dollar.

Canadian manufacturers shipped goods worth an estimated $48.6 billion in January, down 2.1% from the previous month and 2.1% less than in January last year.

January’s decline put the brakes on back-to-back rallies in the last two months of 2006, and completely wiped out gains made in December.

Taking price fluctuations into account, the volume of shipments fell 1.5% to $44.4 billion after showing strong growth in the two previous months.

Two sectors (transportation equipment and petroleum and coal industries) combined to account for the vast majority (96%) of January’s decline.

Companies in the transportation sector shipped $9.6 billion worth of goods in January, down 6% from $10.2 billion in December, which had been the highest level in a year. Transportation companies also reported a $990 million decline in new orders in January.

Overall, shipments fell in 12 of 21 sectors, representing 57% of total output.

Shipments of durable goods dropped 2.8% to $26.7 billion following a strong fourth quarter last year. Shipments of non-durable goods fell 1.3% to $22 billion thanks to the decline in the petroleum and coal sector.

Meanwhile, Canada’s net external liabilities hit $106.8 billion, down 17.4% from the third quarter, the fastest rate of decline on record.

The government agency said the level at the end of 2006 was lower than the level registered at the end of 1980. At that time, for each dollar of international assets, Canada had $2 of liabilities with non-residents. At the end of 2006, Canada owed only $1.09 to non-residents for each dollar in international assets.

Net liabilities represented only 7.3% of gross domestic product at the end of the fourth quarter, the lowest proportion ever. This was down from 9.0% in the third quarter and far below the peak of 44.3% in 1994.

The weakening of the Canadian dollar had a much stronger positive impact on Canada’s international assets than on its liabilities, accelerating the downward trend of Canada’s net external liabilities.

The value of Canada’s international assets reached $1,192.8 billion at the end of 2006, up $49.5 billion, or 4.3%, from the third quarter. The major reason for the increase was the weakening dollar, which added $54.5 billion to the value of Canadian assets held abroad.