Canada’s manufacturing economy saw further progress as operating conditions deteriorated in June
to the latest PMI data from S&P Global. Both output and new orders fell, while companies reported a slight decline in hiring – the first drop in net employment levels since January. Purchasing activity was cut to a stronger level, while companies saw unexpected growth in treasury levels. Confidence in the future was the lowest year to date. Meanwhile, price pressures have been widely contained.
Input prices rose to the weakest degree since January and inflation charged only modest output. S&P Global Canada Seasonally Adjusted Manufacturing Index The purchasing managers’ index (PMI) remained unchanged at 49.3 in June, suggesting further deterioration, albeit marginal in operating conditions. Moreover, it was fourteenth from the consecutive month in which the PMI recorded below the decisive mark of no change of 50.0 to indicate a continuous period of deterioration in manufacturing performance. Production and new orders continued to decline in June. For output, the latest data marked for the eleventh consecutive month in
whose production fell, although the recent cut was only marginal. Comparatively, the decline in new orders was greater than output, reflecting higher prices and a generally soft demand environment. Sales from both home and abroad, a decline was reported, with a decrease in
New export orders have been increasing since May. Several committee members reported that sales were and unexpectedly weakened in June and led to a build-up of post-production inventories in their warehouses. Finished goods inventories rose modestly but nevertheless
The fastest score since April 2014. Companies have also been able to significantly reduce their backlog, which has generally decreased.
For the twenty-third consecutive month and to the maximum degree since last October. This was despite the marginal reduction
Continued decline in Canadian manufacturing sector points to ongoing recession in May
Canadian manufacturers’ new production and orders fell again in May, suggesting that the factory sector remains in a protracted recession.
The S&P Global Canada manufacturing PMI fell to 49.3 in May from 49.4 in the previous month. That measure remained below the 50-threshold separating expansion from contraction for more than a year.
Companies continue to report low market demand, which is characterized by uncertainty and a general unwillingness to commit to new business.” Smith added that factory owners refrained from adding to their inventory.
S&P Global said factory output has now fallen for ten months in a row, with the decline in May being the sharpest of the year so far. For new orders, the decline was the largest in four months.
The report added that competitive pressures limited the degree to which manufacturers can pass on their costs to customers. Production costs – or what companies charge their customers – rose at one of the slowest pace last year.
The Bank of Canada is set to issue a rate decision that most economists believe will be a cut, to provide a marginal boost to the country’s lackluster economic activity. Recent data from Statistics Canada shows that output from the manufacturing sector fell 3.2% in March compared to a year ago and fell 0.6% year-on-year in the first quarter.
The Manufacturing Purchasing Managers’ Index (CAD) is a valuable tool for assessing the health and direction of Canada’s manufacturing sector, providing important insights into broader economic trends and potential future economic performance.
What is CAD Manufacturing PMI
The Manufacturing Purchasing Managers’ Index (CAD) is a leading economic indicator designed to provide insight into the performance of Canada’s manufacturing sector. The Purchasing Managers’ Index (PMI) is a survey-based metric that measures the prevailing trend of economic trends in manufacturing by querying companies’ purchasing managers about various aspects of their operations.
Key points about the CAD Manufacturing PMI include:
Survey Methodology: The Purchasing Managers’ Index (PMI) survey asks purchasing managers about changes in their overall business conditions compared to the previous month. The questions cover aspects such as production levels, new orders, inventory levels, supplier delivery, and staffing
Index calculation: PMI is calculated using the spread index, where a reading above 50 indicates expansion in the manufacturing sector compared to the previous month, while a reading below 50 indicates contraction
Important: As a key indicator, the PMI provides timely information on economic conditions in the manufacturing sector. Changes in the Purchasing Managers’ Index (PMI) could indicate potential shifts in economic growth, production levels and business sentiment.
Components: PMI components (such as new orders, production, employment, supplier delivery, and inventories) provide detailed insights into various aspects of manufacturing activity. For example, an increase in new orders usually indicates future production growth, while lower inventory levels may indicate higher demand.
Impact on markets: Financial markets, policymakers, and economists keep a close eye on PMI data as it can influence decisions regarding interest rates, investments, and economic policies. A consistently high or high PMI can be bullish for the Canadian dollar and stocks, reflecting strong manufacturing activity.
Overall, the Manufacturing Purchasing Managers’ Index (CAD) serves as a valuable tool for assessing the health and direction of Canada’s manufacturing sector, providing important insights into broader economic trends and potential future economic performance.
