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Canada PMI May 2024

Canada: Manufacturing PMI falls in May

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 49.3 in May from April’s 49.4. As a result, the index moved further below the 50.0 no-change threshold, and signaled a faster deterioration in manufacturing-sector operating conditions compared to the previous month.

The primary factors behind the latest PMI reading were accelerated declines in both output and new orders. The drop in production was the steepest so far this year, and the decline in new orders was the sharpest in four months. This downturn was attributed to an uncertain economic and political climate, affecting sales both domestically and internationally. Additionally, firms reduced input buying for the 22nd month in a row, and new export orders decreased for the ninth consecutive month due to reduced demand from the U.S.

May witnessed another solid increase in input costs, although the rate of inflation was the lowest since January. Supply chain delays, particularly related to shipping challenges in the Suez and Panama Canals, were noted as contributing to inflationary pressures. Competitive pressures limited firms’ ability to pass on costs to clients, resulting in a fractional rise in output charges which was the lowest in the current 46-month sequence of increases. Meanwhile, business sentiment improved, reaching a ten-month high, driven by expectations of a more stable economic environment, reduced interest rates, and lower inflation.

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