By Fergal Smith
TORONTO (Reuters) – Contraction in Canada’s manufacturing sector gathered tempo in August as manufacturing and new orders declined, knowledge confirmed on Friday, in a possible signal that greater borrowing prices are working to gradual the home financial system.
The S&P International Canada Manufacturing Buying Managers’ Index (PMI) fell to a seasonally adjusted 48.0 in August, its lowest stage since June 2020, from 49.6 in July.
A studying beneath 50 signifies contraction within the sector. The PMI has been beneath that stage since Could.
“Canada’s manufacturing sector continued to wrestle throughout August, with output and new orders falling at strong charges,” Paul Smith, economics director at S&P International Market Intelligence, stated in a press release.
“Companies responded by chopping buying and utilising present inventories, and signalled some worries over the potential for demand weak point to linger within the months forward.”
The output index fell to its lowest stage since December at 47.7, down from 51.1 in July, whereas the brand new orders index additionally posted a studying of 47.7, falling from 49.2.
Weak point in demand was concentrated within the home market, with the measure of latest export orders displaying enlargement for a second straight month.
The Financial institution of Canada raised its coverage fee in July to a 22-year excessive of 5%. The Canadian financial system has additionally contended in current months with wildfires and a dock employees strike on the nation’s busiest ports.
Staffing ranges have been lower for a fourth straight month and inflation pressures persevered – the enter and output value indexes each climbed to 53.9.
“Regardless of additional indicators of product provide stability and an additional drop in demand for inputs, inflationary pressures picked up as companies all through the provision chain continued to push greater working bills onto their purchasers,” Smith stated.
(Reporting by Fergal Smith; Modifying by Chizu Nomiyama)
