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Canadian factory activity grows at slowest pace in 2 yrs

Workers make jackets at the Canada Goose factory in Toronto, Ontario, Canada, February 23, 2018. REUTERS/Mark Blinch

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TORONTO, Aug 2 (Reuters) – Canadian manufacturing activity lost further momentum in July as production and new orders declined for the very first time since the first stages of the coronavirus pandemic, data showed on Tuesday.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 52.5 in July from 54.6 in June, its lowest level since June 2020. A reading above 50 shows growth in the sector.

The info “revealed another slowdown in operating conditions in Canada’s manufacturing sector,” Shreeya Patel, an economist at S&P Global, said in a statement. “Behind the most recent moderation were contractions in both output and new orders.”

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Both output and new orders indexes fell below the 50 threshold for the very first time since June 2020, hitting 48.9 and 48.8 respectively. Manufacturers pointed to poor material availability and weak demand.

International demand was a specific drag, with new exporter orders declining for another straight month and at a quicker rate than in June.

“Firms continue steadily to face sharply rising costs, which were exacerbated by the war in Ukraine and lockdowns in China,” Patel said.

The input price index dipped to a five-month low of 71.4 but nonetheless showing robust growth, as the way of measuring employment fell to its lowest in 18 months because the rate of job creation slowed.

Firms remained upbeat about prospects for future output but concerns in regards to a possible recession and interest hikes tempered optimism, S&P Global said.

THE LENDER of Canada has raised its benchmark interest by 2.25% since March to an even of 2.50%. Money markets expect further tightening in the coming months.

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Reporting by Fergal Smith; Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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