For the second consecutive month in October, Canadian manufacturing activity expanded as new orders climbed, which could temper Bank of Canada’s concern about the potential for global trade conflicts to derail the domestic economy.
The index of manufacturing conditions of IHS Markit Canada Manufacturing Purchasing Managers (PMI) rise to a seasonally adjusted 51.2 in October, its highest level since February, from 51.0 in September. A reading above 50 shows the sector’s expansion.
“The October survey data shows a turnaround in the Canadian manufacturing sector’s fortunes, with production growth reaching an eight-month high in response to strengthened order books,” said Tim Moore, IHS Markit’s economics associate director.
The new order index has risen from 50.7 in September to the highest level since February, at 51.8. The output measure also scored an eight-month high, rising from 50.2 to 51.1, but was weaker than the long-run average for the survey.
“The gradual recovery in new work since the summer has been underpinned by rising domestic demand, but export sales remain relatively sluggish against a backdrop of weaker global trade conditions,” Moore retorted.
The index for new export orders slipped into contraction, with manufacturers pointing to intense competitive forces at 49.0 from 50.4 in September.
The Bank of Canada said on Wednesday that the economy of the country will be “increasingly tested” by trade uncertainty as it has left its benchmark interest rate keep at 1.75%.
The measure of employment continued to show expansion, but from 52.1 fell to 51.2.


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