- Preliminary 49.4
- S&P global PMI 49.3 final
Highlights from S&P Global:
- Canada's manufacturing sector remained subdued in May with declines in output and new orders accelerating.
- Firms reduced buying activity due to sufficient stock levels.
- Employment rose and business confidence strengthened to a ten-month high.
- Input costs continued to increase solidly, while output charge inflation was the slowest in nearly four years.
- The S&P Global Canada Manufacturing PMI was 49.3 in May, extending the manufacturing downturn to 13 months.
- Output and new orders fell at faster rates, with production dropping for ten consecutive months and the steepest decline of the year in May.
- New export orders declined for the ninth month, especially from the US.
- Purchasing activity was reduced for the twenty-second month, with slight increases in input and output inventories.
- Despite subdued production and new orders, employment increased due to growth projections and expectations of a more stable economic environment.
- Input costs rose for the twelfth consecutive month, driven by vendor pricing and supply chain delays, notably in the Suez and Panama Canals.
- Competitive pressures limited the extent to which firms could pass on costs, with output charge inflation being minimal and the lowest in the current sequence.
The Bank of Canada is meeting on Wednesday with expectations of a cut of 25 basis points.
Commenting on the latest survey results, Paul Smith, Economics Director at S&P Global Market Intelligence said:
Canada’s manufacturing economy remained in a mild downturn during May. Output and new orders continue to fall, and perhaps more worryingly, to stronger degrees than in April. Firms continue to report subdued market demand, characterised by uncertainty and a general unwillingness to commit to new business. Moreover, with sufficient stock noted at their plants, manufacturers saw little need to raise their own buying activity.
Supply chain frictions were again evident and continue to provide a prop to wider inflationary pressures, according to panellists. Input costs indeed rose at a marked pace, but more reassuringly to a degree that remains well below average. With competitive pressures and weak demand, output charges rose only fractionally and point to a more stable inflation environment. This may provide some reassurance to policymakers as they look to finally embark on their widely expected period of monetary policy loosening.