Manufacturing activity in Canada contracted in March following two months of expansion, with economic uncertainty weighing on output and new orders, dampening previously rising optimism about future growth.
Data released today showed the S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) decreased to 48.6 in March, its lowest level since June 2020, from 52.4 in February.
A reading below 50 indicates industry contraction.
Paul Smith, economics director at S&P Global Market Intelligence, said in a statement, “The recovery of Canada’s manufacturing economy stalled during March, with renewed falls in both production and new orders signalled,”
“Broader macroeconomic uncertainty, and the negative impact of rising prices on client purchasing power were key factors that weighed on market demand.”
In recent weeks, stress in the global banking sector has led to the possibility of more prudent lending, which could stall the economy.
The output index decreased to 48.1 from 52.2 in February, and the measure of new orders decreased to 46.5 from 53.3, its lowest level since October.
“Despite these setbacks, there were some positive news to take from the survey, namely that price pressures continued to fall over the month amid reports of better supply-side stability,” Smith said.
The suppliers’ delivery times index reached its highest level since October 2019 at 49.3, up from 46.5 in February, and firms were more optimistic about future development, with the future output index reaching its highest level since April at 64.0.