Canada: IHS Markit manufacturing PMI virtually unchanged in June, signals worsening operating conditions
In June, the IHS Markit Manufacturing Purchasing Managers’ Index (PMI) ticked up to 49.2 from 49.1 in May. The index thus remained below the 50-point threshold for the third consecutive month, signaling worsening manufacturing operating conditions. The average PMI reading for Q2 came in well below Q1’s average, which signals that the manufacturing sector will likely weigh on Q2’s headline GDP figure.
June’s reading reflected a deterioration in output and new orders, although employment rose. Backlogs of work fell at the sharpest rate since data collection began in October 2010. On the price front, input and output price inflation was moderate in June.
Looking ahead, the manufacturing sector will likely remain soft in the coming months as a moderate global growth outlook weighs on demand for Canadian goods. That said, Trump’s decision to lift tariffs on Canadian steel and aluminum could support momentum somewhat.