Canada PMI July 2021

Canada

Canada: Manufacturing PMI eases slightly in July, but remains firmly in expansionary territory

August 3, 2021

In July, the IHS Markit Manufacturing Purchasing Managers’ Index (PMI) fell from 56.5 in June to 56.2. Nevertheless, the index remained well above the neutral 50-threshold, signaling another strong improvement in manufacturing operating conditions from the previous month.

In July, the PMI suggested momentum in manufacturing sector activity ticked down slightly from the previous month due to a more moderate expansion in stocks of purchases. That being said, both output, employment levels and new orders grew at a quicker rate in July relative to June. On the price front, output prices rose at the second fastest pace on record, and predominately due to heightened input price inflation, which firms mostly passed on to clients.

Commenting on the latest print reading, Shreeya Patel, an economist at IHS Markit, noted:

“Though, there are still areas which look to threaten short and long-term productivity. A sharp rise in backlogs suggested severe capacity pressures, with comments often linking labor shortages. Delivery delays and material scarcity also made it difficult for firms to keep up with demand. Meanwhile, intense price pressures continued into the second half of the year, though firms have been passing on the higher expenses.”

FocusEconomics Consensus Forecast panelists expect fixed investment to rise 4.0% in 2021, which is down 0.9 percentage points from last month’s forecast. For 2022, our panel projects fixed investment to increase 3.8%.


Author:, Economist

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Canada PMI July 2021

Note: IHS Markit Purchasing Managers’ Index. Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease.
Source: IHS Markit.


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