Canadian factory PMI rebounds as confidence hits 6-month high
FILE PHOTO: A general view of the factory floor and numerous automated machines used in the production and manufacturing of aircraft parts, at Abipa Canada in Boisbriand, Quebec, Canada May 10, 2023. REUTERS/Evan Buhler/File Photo
By Fergal Smith
TORONTO (Reuters) – Canadian manufacturing activity declined for a ninth straight month in January but there was a slowdown in the pace of contraction as inflation pressures eased and firms grew more confident about the outlook, data showed on Thursday.
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 48.3 in January after slumping to 45.4 in December, its lowest level since May 2020.
A reading below 50 indicates contraction in the sector. The PMI has been below that threshold since May, which is the longest such stretch in data going back to October 2010.
The latest data «provide hope that the downturn in the sector is bottoming out,» Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. «Moreover, firms are looking to brighter times in the next 12 months.»
The future output index climbed to 61.9 from 59.7 in December, posting its highest level in six months, while price measures showed inflation pressures cooling.
The input price index fell to 53.3 from 54.1 in December and the output price index was at a seven-month low of 52.2, down from 52.7.
«Manufacturers and indeed policymakers will also be encouraged by the latest price indices, which continued their recent disinflationary paths in January,» Smith said.
The Bank of Canada has said that its focus is shifting to when to cut interest rates rather than whether to hike again.
On a more cautious note, the average lead times for the delivery of inputs lengthened for the fourth time in five months as firms reported shipping delays caused by the crisis in the Red Sea and Suez Canal.
The suppliers’ delivery times index fell to 48.8 from 50.9 in December.