February data pointed to a relatively strong improvement in overall business conditions, which continued the positive start to 2018 for the manufacturing sector.
Article continues below
Robust rises in output and new orders contributed to the sharpest pace of job creation for six months.
At the same time, input buying increased to the largest extent since May 2011, driven by a combination of higher workloads and efforts to boost inventories.
Stronger demand for manufacturing inputs and stretched transport capacity resulted in a further sharp lengthening of suppliers’ delivery times during the latest survey period.
At 55.6 in February, the seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) eased only slightly from 55.9 in January and remained well above the 50.0 no-change threshold.
Improving business conditions have been recorded in each month since March 2016.
Manufacturing production growth slowed from January’s six-month peak, but remained stronger than the average since the survey began in 2010.
Robust rises in output levels were driven by another marked improvement in new business intakes in February.
Survey respondents cited improving underlying demand and greater sales to export clients in particular.
New orders from abroad expanded at the strongest rate since November 2014, which manufacturers linked to increased sales to US clients and a more supportive global economic backdrop.
However, there were signs of capacity pressures across the Canadian manufacturing sector in February, with backlogs of work accumulating at the steepest pace in almost seven-and-a-half years of data collection.
Anecdotal evidence suggested that greater workloads and supply chain bottlenecks were a factor leading to increased volumes of unfinished work.
Efforts to boost operating capacity led to a robust rate of employment growth and the fastest rise in input buying for almost seven years in February.
Strong demand for materials in turn led to one of the steepest declines in supplier performance since early-2011.
A number of manufacturers noted that new US trucking regulations had added to capacity issues among vendors.
Meanwhile, intense cost pressures persisted in February, with the rate of input price inflation still close to the 43-month peak seen in November 2017.
Higher raw material prices and rising staff salaries also contributed to another sharp rise in factory gate charges. ■