By Robb M. Stewart
Canadian manufacturing activity slipped further into contraction territory last month with a decline in output, orders and employment as companies see softening market conditions, data showed Monday.
The S&P Global Canada manufacturing purchasing managers index fell to 47.5 in September from 48.0 the month before, slipping further below the 50 threshold that separates expansion from contraction.
“In line with the global industrial downturn, the Canadian manufacturing sector continued to experience lacklustre performance,” Paul Smith, economics director at S&P Global Market Intelligence, said.
Smith said output and new orders both fell by steeper degrees in September amid evidence of slow market demand, with price levels remaining a problem for many clients, “especially as Canadian manufacturers continued to hike their charges to a solid degree.”
Industry-level gross domestic product, a broad measure of the goods and services produced across the economy, was essentially unchanged in July from the month before, though advance information points to growth of 0.1% in August, data released last week by Statistics Canada showed.
The Bank of Canada, which next meets to decide on interest rates Oct. 25, last month held its benchmark policy rate steady at 5% following back-to-back one-quarter point increases in June and July. Annual inflation accelerated for a second month running in August, with the consumer price index rising 4% after a 3.3% increase the month before, driven largely by a jump in gasoline prices.
S&P Global said the decline in manufacturing production in September was the steepest since August 2022, while sales were the worst since March. New export orders fell for the first time in three months in September, and saw the steepest fall since May.
The data showed the steepest reduction in backlogs of work for 40 months, with manufacturers reducing both their purchasing activity and employment in September. Staffing numbers have now fallen for five successive months, though S&P Global said the latest rate of contraction was modest.
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