Canadian factory activity slows further in June

By Fergal Smith

TORONTO (Reuters) – A contraction in Canada’s manufacturing sector deepened in June as an uncertain economic outlook weighed on domestic and foreign demand, data showed on Tuesday.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 48.8 in June from 49.0 in May. A reading below 50 indicates a declining sector.

“Reports of reduced demand in the market, both at home and abroad, are widespread, with clients reportedly holding back from doing new business due to the uncertain economic outlook,” Paul Smith, director of economics at S&P Global Market Intelligence, said in a statement.

The new orders index fell, to 48.5 from 48.6 in May, while the measure of new export orders declined for the 13th consecutive month.

High interest rates contribute to the postponement of spending decisions, manufacturers say.

The Bank of Canada last month raised its benchmark interest rate to a 22-year high of 4.75%.

As demand weakens, companies move to cut excess input inventory. The buying stocks index fell to 47.3 from 48.6 in May, the 11th consecutive month of decline.

In an encouraging sign for inflation, a combination of reduced input purchases and the easing of supply challenges related to the pandemic led to a sharp increase in lead times for deliveries. at the input. The index of delivery times of suppliers was at 51.8, up from 50.9 in May.

The improvement in vendor delivery times “has obviously helped to ensure that inflationary pressure remains under control,” Smith said.

“However, with a lack of market demand the main reason behind the shortening of lead times, it is difficult to get away from the feeling of lower performance in the industry heading into the second half of the year,” Smith said. .

(Reporting by Fergal Smith; Editing by Mark Porter)