Canada: Manufacturing sector deteriorates at a softer clip in May
June 1, 2020
In May, the IHS Markit Manufacturing Purchasing Managers’ Index (PMI) increased from 33.0 in April to 40.6. Nevertheless, the index remained well below the neutral 50-threshold, signaling a deterioration in manufacturing operating conditions from the previous month.
May’s result reflected softer declines in output, new orders and employment, but all were still the second-sharpest decreases in the survey’s history. Social distancing forced manufacturers to restrict capacity to abide by new regulations in the workplace to limit the exposure and spread of the virus to ensure worker safety. Moreover, roughly 40% of survey respondents reported a decline in staffing levels in May.
On the price front, input prices increased notably, which was likely tied to the sharp depreciation of the Canadian loonie relative to the U.S. greenback.
Commenting on the print, Tim Moore, economics director at IHS Markit, noted:
“May data highlights that the Canadian manufacturing sector remains on a steep downward trajectory, despite the speed of decline moderating from April's survey record. A severe drop in demand from both domestic and export markets amid the COVID-19 pandemic resulted in sharp cutbacks to production volumes.”
Author: Steven Burke, Economist