Manufacturers were cautiously optimistic about prospects for the first quarter of this year after being clobbered by SARS, mad cow disease and a major power blackout in Ontario in 2003, says Statistics Canada.

“Confidence improved and greater satisfaction was expressed for production, finished products inventory levels and orders received,” the agency said Wednesday. However they were still concerned about low levels of unfilled orders.

Thirty per cent of 4,000 manufacturers surveyed expected to increase first-quarter production; 15% expected a decrease.

“Manufacturers in all provinces were positive about production prospects for the coming three months,” StatsCan said.

Twenty-four per cent reported increased orders, compared with 20% in October.

Eighty-five per cent were content with their current finished product inventories; *t% found them too high and &% said they were too low.

Ten per cent felt they had a higher-than-normal backlog of unfilled orders, 23% a lower-than-normal backlog.

While 83% expected to keep or add to their workforce in the next three months, 17% expected a decrease.

StatsCan conducts its business conditions survey in January, April, July and October.

“Though a series of unforeseen shocks may have greeted them in 2003, the export-intensive manufacturing sector remains cautiously optimistic about the prospects for the opening months of this year,” says RBC Financial.

“The Business Conditions survey, arguably one of the best ISM-style indicators of manufacturing sentiment in Canada showed that the balance of opinion (at +14) weighed toward production increases in the first quarter.”

“On balance, today’s report confirms our suspicion that the outlook for manufacturers remains generally positive, even in the face of a soaring Canadian dollar,” RBC concludes.

“This report is a dose of good news for Canada and clearly shows that the manufacturing sector continues to rebound from the series of shocks that weighed on the Canadian economy in 2003,” notes BMO Nesbitt Burns. “It also comes at a time of heightened concern over the economic outlook after the Bank of Canada recently sliced its growth forecast for 2004 to 2.75% from 3.25%.”