Industrial shipments rose by 0.8% in value in February to $45.8 billion as prices spiralled upwards, Statistics Canada said today.

Analysts had called for an advance of 0.5%.

StatsCan cautioned that Canadian manufacturers will likely face challenges as prices continue to rise. However, the agency said that for the first time since mid-2001 the trend for unfilled orders turned positive.

“Bolstered by the signing of several new contacts in the aerospace products and parts industry, total unfilled orders increased 0.6% to $36.1 billion in February,” following a 2.8% advance in January. But with aerospace manufacturing excluded, unfilled orders actually decreased by 0.3%.

New orders didn’t fare well, falling back by 0.8% to $46 billion following solid gains of 2.4% in December and 2.5% in January.

“Weaknesses in computers, motor vehicles and aerospace products and parts manufacturing contributed to the drop,” the agency said.

And inventories tumbled to a four-year low.

Inventories fell another 0.8% to $58 billion in February, the ninth decrease in 10 months.

Economists say today’s reading on shipments is a more reliable indicator of economic performance than the huge export gains reported yesterday.

“While not nearly as buoyant as yesterday’s 7% jump in exports for the same month, shipments also did not fall nearly as far as exports in January,” comments BMO Nesbitt Burns.

“This report provides a more realistic assessment of how the Canadian economy is faring, compared to the wild swings seen recently in exports and imports. Manufacturing is gradually regaining ground alongside strong U.S. growth, although domestic activity is far from robust,” Nesbitt says. “We expect industrial production to rise by just under 3% this year after a flat performance in 2003. The moderate gains in manufacturing in February offer more evidence that GDP snapped back in the month after the 0.1% drop in January. We still look for Q1 GDP growth to be 2.6%, or about 2 percentage points below the U.S. pace in the quarter.”