Canada: Manufacturing PMI tapers marginally in October
In October, the IHS Markit Manufacturing Purchasing Managers’ Index (PMI) fell slightly to 55.5 from 56.0, but remained upbeat nonetheless. The index was still well-above the neutral 50-threshold, signaling an improvement in manufacturing operating conditions from the previous month.
In October output expanded at the strongest pace since August 2018, but new orders and jobs expanded at a slightly softer pace. Moreover, incomplete work volumes increase sharply, while stocks of finished goods fell in October. On the price front, input price inflation rose notably due to strong demand for raw materials, while output price inflation remained elevated in October. Lastly, despite business confidence ebbing slightly it remained upbeat in October as the majority of manufacturing expected stronger production levels for the year ahead.
Commenting on the print, Shreeya Patel, economics director at IHS Markit, noted:
“Companies appear to be struggling somewhat with the surge in new orders as backlogs rose further while employment increased only marginally during October, highlighting clear capacity pressures at Canadian manufacturers. Higher backlogs will help sustain the recovery in output through the winter should new orders drop off, but there are also clear supply-side risks with the latest data revealing much longer input delivery times linked to shortages. Firms are attempting to restock inputs and there was an overall rise for the first time in nearly a year in October, albeit only a fractional increase.”