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Weakest improvement in business conditions in Canada for six months

Staff Writer |
August data signalled a renewed slowdown in output and new business growth across the Canadian manufacturing sector.

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Survey respondents commented on generally subdued client demand and a further slight reduction in new export work. This contributed to more cautious staff hiring policies in August and the fastest decline in purchasing activity since the start of 2016.

Meanwhile, the latest survey signalled a further robust rise in input costs, but average prices charged by manufacturers increased only slightly.

Adjusted for seasonal influences, the Markit Canada Manufacturing Purchasing Managers’ Index (PMI) registered 51.1 in August, down from 51.9 in July, to signal a marginal overall improvement in business conditions.

The headline index has now posted above the 50.0 no-change mark for six months running, but the latest reading was the weakest recorded during this period.

Canadian manufacturers pointed to the slowest rise in production levels for six months in August. Anecdotal evidence suggested that subdued demand conditions and strong competition for new work had acted as a brake on output growth.

Reflecting this, the latest upturn in new order volumes was much weaker than the 16-month peak seen in April. Softer growth of incoming new work was linked in part to another drop in export sales, although the rate of decline was only marginal.

A sustained fall in new work from abroad during August contrasted with the solid rates of expansion seen earlier in 2016. â– 

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