Canada PMI May 2019


Canada: IHS Markit manufacturing PMI deteriorates in May

June 3, 2019

In May, the IHS Markit Manufacturing Purchasing Manager’s Index (PMI) fell to 49.1 from 49.7 a month earlier. The index thus moved further below the 50-point threshold, signaling the second consecutive monthly decline in manufacturing operating conditions.

May’s reading reflected a notable drop in new orders and output, which fell at the steepest rate in over three years. Firms cited weaker client demand in both domestic and foreign markets amid sluggish global trade conditions and weaker construction activity. In contrast, job creation posted a modest rebound in May after dipping in April. On the price front, input price inflation eased to an over four-year low, while output prices ticked up. Despite May’s contraction in business operating conditions firms were mostly optimistic about future output on the back of hiring plans, new products, factory expansion and the general economic outlook.

Going forward, the manufacturing sector will likely remain subdued as uncertainty over global trade protectionism, especially concerning the U.S.-Mexico trade spat, weighs on demand for Canadian goods; however, Trump’s decision to lift tariffs on Canadian steel and aluminum and the likely ratification of the USMCA should support investment and purchasing activity.

FocusEconomics Consensus Forecast panelists expect fixed investment to decrease 1.6% in 2019, which is down 0.3 percentage points from last month’s forecast. For 2020, our panel projects fixed investment to increase 2.2%.

Author:, Economist

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Canada PMI Chart

Canada PMI May 2019

Note: IHS Markit Purchasing Managers’ Index. A reading above 50 indicates an expansion in purchasing activity while a value below 50 indicates a contraction.
Source: IHS Markit.

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