Canadian factory PMI shows sector softening further in June

Fergal Smith
·2-min read
A factory worker works on an aircraft part, as the robot arm of an automated five-axis cell operates autonomously nearby, at Abipa Canada, in Boisbriand

By Fergal Smith

TORONTO (Reuters) - Canadian manufacturing activity deteriorated in June, extending a record-setting run of contraction for the sector, as new orders declined and firms cut jobs for the first time in five months, data showed on Tuesday.

The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) was unchanged in June, matching the seasonally adjusted 49.3 level that was posted in May.

It was the 14th straight month the PMI was below the 50.0 no-change mark, the longest such stretch in data going back to October 2010. A reading below 50 marks contraction in the sector.

"The performance of the Canadian manufacturing economy remained subdued in June," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.

"Panellists noted that underlying market demand remained soft, whilst also commenting that sales were perhaps weaker-than-expected – resulting in the accumulation of some excess inventory at their plants."

The new orders measure was at 48.2, up only slightly from 48.1 in May, while the employment measure moved into contraction for the first time since January, falling to 49.2 from 50.3.

One bright spot in the data was an easing of cost pressures, with the input price index dipping to 53.6, its lowest level since January, from 53.8 in May.

"A positive from the latest survey is that price pressures appear broadly contained, with costs rising at a softer pace than in recent months and charges increasing only modestly," Smith said.

"However, limited pricing power is broadly a function of weak demand and a competitive marketplace, and with firms noting that prices remain too high for many clients, confidence in the future has subsequently softened to its lowest level of the year so far."

The measure of future output fell to 60.1 from 62.1 in May, marking the lowest reading since December.

(Reporting by Fergal Smith; Editing by Chizu Nomiyama)

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