Canadian manufacturing shipments slipped in October as the effects of September 11 continue to bite.

Shipments fell 2.9%, while economists were expecting to see a small bounce in the number. “Canadian manufacturers reported broad-based weakness in October, as activity felt the delayed impact of post-September 11 disruptions,” says BMO Nesbitt Burns.

The major surprise was in the auto sector, BMO notes, where shipments plunged 14.4% in October. A number of plants faced temporary shutdowns after Sept. 11 due to parts shortages. But the surge in auto sales since then points to a big rebound in auto shipments in next month’s report, it says.

Manufacturers reported generally weak activity even outside of the auto sector, as non-auto shipments fell 1.3%. Almost all aspects of the report were weak. New orders were down 5.1%. “While U.S. orders fully rebounded in October, Canada witnessed a deepening decline. Additionally, the inventory-to-shipments ratio hit a nine-year high of 1.57, even with a 0.9% cut in inventories,” says BMO.

Royal Bank economists say no good news was found in the report. “Despite the success of inventory reduction in recent months, current inventory levels continue to remain uncomfortably high,” it says.

“This report represents a delayed reaction to the disruptions in the wake of Sept. 11, and much of the decline was due to autos, which have since rebounded. Still, the overall tone is clearly weak, and bodes poorly for tomorrow’s merchandise trade result,” concludes BMO.