Canadian factory activity grows at slowest pace in 17 months

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Workers are seen at Bri-Steel Manufacturing, a manufacturer and distributor of large diameter seamless steel tubes, in Edmonton, Alberta, Canada June 21, 2018. REUTERS/Candace Elliott/File Photo

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TORONTO, July 4 (Reuters) – Canadian manufacturing activity lost momentum in June as inflationary pressures and material shortages dampened output and businesses became less optimistic about future production, data showed. Monday.

The S&P Global Canada manufacturing Purchasing Managers’ Index (PMI) fell to 54.6 seasonally adjusted in June, its lowest level since January 2021, from 56.8 in May. A reading above 50 indicates growth in the sector.

“There were signs of difficulty in the Canadian manufacturing sector in June,” Shreeya Patel, economist at S&P Global, said in a statement. “Global supply issues and severe pricing pressures were at the heart of the problem and are expected to continue to disrupt the manufacturing economy this year.”

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The production index fell to its lowest since June 2020 at 50.9, from 55.6 in May, weighed by a reduced flow of new work, material delays and higher costs.

Price increases have deterred some customers from placing orders, manufacturers said, adding that a drop in international demand was due to the war in Ukraine and weak demand from Europe and Asia. .

Economists have cut their forecasts for the global economy in recent weeks as war and lockdowns in China to curb COVID-19 exacerbate supply shortages, making it more likely that central banks, including the Bank of Canada, will aggressively raise interest rates to fight soaring inflation.

“A decline in confidence indicates that businesses are aware of the real difficulties that could hit the global economy over the next 12 months. Businesses have recovered well from the pandemic and will now need to prepare for further difficulties,” said patel.

The future production measure fell to a 17-month low.

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Reporting by Fergal Smith Editing by Chizu Nomiyama

Our standards: The Thomson Reuters Trust Principles.

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