By Robb M. Stewart


Canadian manufacturing activity remained weak last month with a further deterioration in operating conditions, data showed Tuesday.

The S&P Global Canada manufacturing purchasing managers index was unchanged in June at 49.3, extends the downturn in manufacturing. The measure has remained below the 50 threshold that separates expansion from contraction for 14 consecutive months.

"The performance of the Canadian manufacturing economy remained subdued in June, with output, new orders, employment and purchasing all falling," said Paul Smith, economics director at S&P Global Market Intelligence.

Manufacturers reported continued soft underlying market demand, though price pressures appeared broadly contained with costs rising at a slower pace than in recent months, Smith said.

After stalling in the second half of last year, Canada's economy has rebounded in the first quarter of 2024 even as unemployment has continued to edge higher and inflation has cooled. The Bank of Canada last month became the first Group of Seven central bank to offer rate relief, cutting a policy interest rate that had been held at more than a two-decade high for almost a year.

S&P Global's survey showed manufacturing output declined for an 11th successive month, though the reduction in June was only marginal. The fall in new orders was sharper, reflecting high prices and generally weak demand, and sales from both in Canada and abroad were down with a steeping in the decline in new orders, it said.

Several panelists reported that sales had been unexpectedly weak in June and had led to the accumulation of post-production inventories at their warehouses, S&P Global said. Overall, inventories of finished goods rose at the faster rate since April 2014, albeit at a modest pace.

Staffing levels in manufacturing declined for the first time since January, with a margin cut in employment as companies sought to realign capacity and boost productivity, the report said.

S&P Global said sentiment was the lowest recorded by the survey so far this year. Looking ahead at the coming 12 months firms retained a reasonable degree of confidence that output will be higher than present levels.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

07-02-24 1016ET