Manufacturing AUTOMATION

Report: Downturn in Canadian manufacturing continues in November

December 5, 2023
By Manufacturing AUTOMATION/ S&P Global Canada Manufacturing

The downturn in Canadian manufacturing industry continued in November. The seasonally adjusted S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI), recorded at 47.7, down from 48.6 in October.

The composite single-figure indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases, posted below the 50.0 no-change mark, signalling an accelerated rate of contraction that was close to September’s 40-month record.

According to the report, firms continued to use existing input inventories wherever possible in the face of faster input price inflation. However, some positive projections for growth meant that manufacturers added to their staffing levels for the first time in seven months.

There were concurrent falls in production and new orders during November. Rates of decline accelerated in both cases, with the net reduction in sales the sharpest since August 2022. Panellists commented on client hesitancy in product markets, in part due to global conflicts like the war in Ukraine. Elevated inflation also continued to eat into client budgets, according to panellists. Reflective of the international nature of these factors, new export orders declined during November for the third month running, and to the greatest degree since March.


Manufacturers remained circumspect when it came to buying in new inputs during November. Latest data showed that purchasing activity declined for the sixteenth successive month, against a backdrop of falling orders and production requirements. Firms also signalled a preference for utilizing stocks, which were lowered for a sixteenth successive month. This in part reflected the high cost of buying new inputs. Input cost inflation accelerated to the highest since April 2023, but remained below the long-run survey average. Vendors were reported to have raised their list prices for goods like steel, driven in some cases by stock shortages, which in turn contributed to another month of mildly worsening delivery times. Manufacturers sought to protect their margins by raising their own charges to a greater extent. Overall, output price inflation rose to a nine-month high in November.

Despite cost pressures and deteriorating sales demand, manufacturing employment rose slightly in the latest survey period. It was the first time in seven months that a rise in staffing levels has been recorded amid reports that leavers were being replaced and long-held vacancies filled. Positive projections for production also supported employment growth, as seen by a tick-up in confidence about the future. Expectations were underpinned by hopes of a rise in sales demand and broader economic expansion in the next 12 months. However, for several firms the outlook remains unusually uncertain, linked to worries about high-interest rates, elevated inflation, and the war in Ukraine. Positive sentiment therefore remained well below its historical trend during the latest survey period.

Commenting on the latest survey results, Paul Smith, economics director at S&P Global Market Intelligence said, “Once again, the Canadian manufacturing PMI revealed some of the broad-based challenges facing the economy heading towards the end of the year. On the one hand, output and new orders remain mired in contraction territory, linked in part to a broader-based global industrial weakness which is limiting demand and sales. Destocking remains prevalent across the supply chain, and client budgets are stretched. However, inflation remains stubbornly persistent, with both price indices picking up since October. Although inflation rates remain well down on previous year’s highs, both vendors and manufacturers alike remain willing to push cost increases downstream to clients. This suggests there remains some work to do to fully eradicate systematic price pressures, a situation made more complicated by a still relatively healthy labour market.”

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