The impact of SARS and the single case of mad cow disease in Alberta is showing up in the latest report on manufacturing. Statistics Canada reported Wednesday that finished-product inventories continued to accumulate and unfilled orders remained lethargic in May.

Manufacturers’ shipments fell 0.8% to $42.4 billion, following April’s sharp drop of 3.4%.

This report confirms the fears expressed by the Bank of Canada yesterday, when it lowered the interest rate. The bank’s goal is to boost the Canadian economy.

Meanwhile, in Washington, U.S. Federal Reserve Governor Alan Greenspan says the Fed stands ready to reduce interest rates further if necessary to boost the U.S. economy. Greenspan also cut his growth forecasts for the year.

The U.S. Labor Department reported Wednesday that consumer prices rose for the first time in three months in June led by a rebound in food and energy prices.

This also confirms Greenspan’s cautious approach, and pops the deflation balloon that has been raised by market bears in recent months.

The American consumer-price index climbed 0.2% in June, the first increase since March, the Labor Department said. Excluding volatile food and energy prices, the core index was unchanged from May.

The U.S. Labor Department says average weekly earnings were unchanged in June as a 0.2% increase in average hourly earnings was offset by a 0.2% increase in the CPI for urban wage earners and clerical workers. Average weekly hours were unchanged.

In a separate report that further dampens the deflation concern, the U.S. Commerce Department says business inventories fell 0.2% to a $1.17 trillion in May. Business sales were flat during the month, after dropping 1.7% in April.

These reports have been good news for the futures markets, which are up ahead of the opening of equity markets.

Tokyo stocks closed lower overnight. The Nikkei lost 15.03 points, or 0.15%, to 9,735.97. Hong Kong shares rose to their highest close of the year. The Hang Seng Index climbed 71.62 to 10,207.17 as buyers snapped up blue chips.

In Europe, London’s FTSE 100 index is up 13.2 points, or 0.3%, at 4115.7, led higher by insurer Aviva, which is up 2.6%. Frankfurt’s DAX 30 index has risen 31.43 points, 0.9%, to 3416.12. Paris’s CAC 40 index is up 11.42 points, or 0.4%, to 3,190.75.