Canadian manufacturers ended 2006 on a positive note as factory shipments increased for the second month in a row in December, thanks to strength in the transportation equipment sector, Statistics Canada reported today.

However, the year-end rally was not enough to offset several months of weak performances earlier in the year. As a result, total shipments for 2006 as a whole edged down 0.6% to $587.4 billion from the peak level in 2005.

December’s increase was widespread, with 13 sectors representing 74% of total output improving. On a monthly basis, factories shipped goods worth an estimated $49.7 billion in December, up 1.7% from November. The transportation sector, led by automobiles, shipped $10.2 billion worth of product in December, the first time in 2006 that it had surpassed the $10-billion mark.

There were no clear winners and losers among the various sectors in manufacturing last year. Taking price fluctuations into account, the annual volume of shipments fell 1.6% to $539.3 billion, a decline of nearly $9 billion.

Still, 2005 had seen the highest level of constant dollar shipments on record while 2006 real shipments were more in line with 2003 levels.

Again, taking price fluctuations into account, the volume of shipments in December rose 1.4% to $45.6 billion.

December’s shipments of durable goods jumped 3.0% to $27.5 billion, the third consecutive monthly increase following declines through the third quarter. Again, this was due to a strong showing in the transportation equipment sector.

Non-durable goods shipments edged up 0.2% to $22.2 billion in December. Higher shipments of petroleum and coal were nearly offset by declines in chemicals.

Manufacturers started 2006 in a cautious mood, noted StatsCan, but became increasingly pessimistic as the year wore on.

In 2006, manufacturing job losses were seen primarily in Ontario and Quebec. In contrast, large gains in manufacturing were seen in Alberta, British Columbia and Manitoba over the course of the year.