Canadian manufacturers saw an improvement in operating conditions and weaker growth of new orders fed through to a dip in sentiment to a 17-month low, according to a S&P Global Canada Manufacturing PMI report.

“There were signs of difficulty in Canada’s manufacturing sector in June. The PMI dipped to the lowest for 17 months amid softer uplifts in output, new orders, purchases, and employment,” said Shreeya Patel, economist, S&P Global Market. “Global supply issues and steep price pressures were at the heart of the issue and are expected to continue to disrupt the manufacturing economy this year.”

Firms indicated concerns over the global economy and the lingering implications of COVID-19.


The report registered 54.6 in June, down from 56.8 in May. The latest reading signalled 24 continuous months of growth, although the improvement was the third weakest in this sequence.

The two largest components of the PMI by weight – output and new orders – were behind the latest moderation. Both sub-indices dipped notably from May and fell to 24- and 23-month lows.

Production volumes rose in June, with expansions now seen in each month for the last two years. That said, growth eased considerably from May and was only marginal overall. Softer inflows of new work, material delays and higher costs were reportedly behind the slowdown.

Faced with increasing orders, firms in Canada raised their headcounts. The rate of growth was solid, but softer than that seen in May, and the joint-weakest for nine-months.

The war in Ukraine and lockdowns in China added to transportation difficulties in June, alongside mentions of port congestion and container shortages. Vendor performance worsened in June, with the latest deterioration among the sharpest in the series. With firms facing delays receiving some key inputs, there was a further accumulation of backlogs.

Turning to prices, input price inflation rose substantially, and at an accelerated pace in June. Higher prices were reported for a range of goods and services including metal, fuel, energy, resin and transportation. Overall, the rate of increase was marked, and among the quickest in the series history. A general uptick in expenses contributed to another sharp increase in selling prices at the end of the quarter.

Rising prices paired with weaker output growth led to a softer increase in buying activity in June. Stocks of purchases meanwhile rose marginally, and at the softest pace for 16 months.


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