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Slight improvement in manufacturing conditions in Canada

Staff Writer |
October data pointed to another challenging month for the Canadian manufacturing sector, with production volumes stagnating amid subdued demand patterns and ongoing efforts to reduce finished goods inventories.

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That said, the latest survey highlighted a slight improvement in overall business conditions, driven by a renewed rise in new work and greater employment numbers. Meanwhile, operating margins were eroded further amid falling factory gate charges and a sharper increase in manufacturers’ input costs.

Adjusted for seasonal influences, the Markit Canada Manufacturing Purchasing Managers’ Index™ (PMI™) registered 51.1 in October, up from September’s seven-month low of 50.3.

The index has posted above the 50.0 no-change threshold in each month since March, but the latest reading was weaker than the survey average (52.4) and signalled only a marginal improvement in overall business conditions.

Production volumes stagnated in October, which was a key factor weighing on the headline PMI and contrasted with the sustained output growth seen during the previous seven months.

Reports from survey respondents suggested that inventory drawdown and relatively weak client demand had placed a brake of production levels. Reflecting this, stocks of finished goods decreased at the sharpest pace since July.

October data highlighted a slight rebound in new business volumes, following the decline recorded during the previous month.

Some firms linked rising sales to new product launches, alongside successful promotional discounting, but there were also reports that subdued energy sector demand had weighed on new business volumes.

At the same time, export sales were broadly unchanged in October, which compared favourably with the marginal declines seen through the third quarter of 2016.

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