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Solid growth in manufacturing production sustained in April: report

May 6, 2022   Monica Ferguson

April showed expansion in operating conditions in the Canadian manufacturing sector, despite a slight moderation since March, according to S&P Global Manufacturing PMI.

Looser COVID-19 restrictions and improvement in demand conditions led to strong flow of new work, while output and purchases rose sharply. Meanwhile, capacity pressures continued to emerge, which firms responded to by raising their staffing levels.

With strong demand conditions, firms raised their production levels at the start of the quarter. Output rose sharply, though at a softer pace than that in March. Consumer goods firms raised their output levels at the strongest rate followed by those in the investment and intermediate goods sectors.

Vendor performance deteriorated during the month, although to the joint-weakest degree since November 2020. There were widespread reports of material scarcity, truck shortages and freight delays.

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Raw material scarcity and lengthy lead times prompted Canadian manufacturing firms to raise their pre-production inventories. Stockpiling has now been seen in each of the last 15 months. Purchasing activity rose at the third-strongest rate in the series history.

Input price inflation moderated from March’s peak. Increases were substantial and among the quickest in the series history. Several reasons were cited for higher input costs including rising fuel, material, transportation, labour expenses and the war in Ukraine reportedly drove up input costs.

Selling prices rose sharply. Rate of inflation was the second strongest in the series history surpassed only by that seen in March. Firms reported efforts to protect profit margins and pass on higher transportation and material costs.