S&P global PMI for Canada fall to lowest since May 2020
Highlights from S&P Global on the PMI:
- Intensified Downturn in Manufacturing Sector: Canada’s manufacturing sector experienced an accelerated decline in output and new orders in December.
- Job Losses and Subdued Confidence: There was a return to job shedding, and confidence about the future remained low compared to historical survey data.
- Price Increases Amidst Falling Demand: Prices continued to rise, despite weakening demand for inputs and improved supply conditions.
- PMI Decline to Lowest Since May 2020: The S&P Global Canada Manufacturing PMI registered 45.4 in December, down from 47.7 in November, indicating contraction for the eighth consecutive month.
- Significant Decreases in Output and New Orders: December saw the steepest declines in output and new orders since May 2020, largely due to high prices impacting domestic and foreign demand.
- Decline in New Export Orders: There was a notable reduction in new export orders, the largest decline in over three years, partly due to global conflicts affecting manufacturing demand.
- Cuts in Purchases and Employment: Firms reduced their input purchasing and employment levels, with a strong preference for using existing stock due to weak order trends.
- Increased Costs in Supply Chain: Despite lower demand, input prices continued to rise, leading firms to increase their charges, albeit at a slower rate than in November.
- Improving Supply Conditions: Average vendor times improved for the first time in four months, indicating an easing of supply chain issues.
- Modest Confidence for Future Production: Firms showed modest confidence for a rise in production over the next 12 months, though concerns about high prices and interest rates persist. Confidence remains below trend despite a slight increase.
- Data Collection Period: The data was collected between December 6 and 18, 2023.
Commenting on the latest survey results, Paul Smith,
Economics Director at S&P Global Market Intelligence
said:
Canada’s manufacturing economy endured a difficult
end to 2023 and with that rounded off a challenging
year for the sector overall. The respective PMI posted
below the 50.0 no-change mark for the ninth time in
2023, and comfortably registered its worst reading
in the post-pandemic period. Accelerated declines in
both production and new orders were registered, amid
reports that demand for manufactured goods remains
subdued.
Firms noted that clients remain burdened by high prices,
and these continued to rise throughout the supply chain
over the month. However, at least rates of inflation eased
according to the PMI data, and given the increasingly
weak demand environment, are likely to continue to
fall in the months ahead. With employment also down
quite noticeably, there are also signs of a loosening of
the industrial labour market. This development will add
to hopes that the Bank of Canada remains firmly on its
stated path of restoring price stability in 2024.
The USDCAD is pushing to new highs for the day at 1.33203. The low price from last week’s trading – and lowest level since early August – reached 1.31766. The 38.2% retracement of the move down from the December 12 high comes in at 1.33451. That is the next major target. Today the price moved above its 200-hour moving average at 1.32668. That break above that MA was the first since December 13