Canada: Manufacturing PMI plummets to series record low in April
May 1, 2020
In April, the IHS Markit Manufacturing Purchasing Managers’ Index (PMI) decreased from 46.1 to 33.0 in April. The reading marked the lowest level since current records began in October 2010. Therefore, the index was well below the neutral 50-threshold, signaling a deterioration in manufacturing operating conditions from the previous month.
April’s outturn reflected unprecedented contractions in output, employment and new orders, as Covid-19 took its toll on an already battered manufacturing sector. Factory shutdowns and border closures led to a sharp fall in both domestic and foreign demand in April, while firms’ sentiment regarding future output also fell to a survey record low. The fall in the PMI was partly cushioned by a sharp rise in supplier delivery times, but this was the result of supply chain disruptions rather than upbeat demand, consequently muddling the print. On the price front, both input prices increased at the slowest pace since July 2012 due to weak demand and flagging commodity prices, while output charges fell as firms discounted prices to entice buyers.
Commenting on businesses’ sentiment in April, Tim Moore, economics director at IHS Markit, highlighted:
“Manufacturers widely commented on concerns about the outlook for capital spending in the energy sector, as well as uncertainty about the length of customer closures and worries about a protracted downturn in global economic conditions.”
Author: Steven Burke, Economist