Canadian manufacturing growth improves in September: report

September was a good month overall for the Canadian manufacturing sector, a new report said, with output and new business growth regaining momentum after August’s slowdown.

According to the Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions compiled by IHS Markit, manufacturers are also more confident about the year ahead business outlook than at any time since April.

The PMI rose to a seasonally adjusted 55.0 last month from 54.6 in August. A reading above 50 shows growth in the sector.

The measure of new orders rose to 54.9 from 54.4, with firms citing increased client demand and product development. New export orders grew more slowly, rising to 51.3 from 50.9, and respondents said there less demand from the United States.

A key factor behind the rise in the headline PMI since August was faster rates of output and new order growth, the report said. “Reports from survey respondents cited improving client demand, a supportive economic backdrop and successful product development,” IHS Markit said. “While manufacturing companies generally commented on resilient domestic demand, some also noted that subdued export sales had held back growth in September. Latest data indicated only a marginal rise in new orders from abroad, which was partly linked to weak demand from U.S. clients.”

Canadian manufacturers indicated a solid degree of job creation in September, the report said, although the rate of employment growth eased from August’s survey-record high. “Survey respondents commented on renewed efforts to boost capacity in response to rising demand, although some noted that skill shortages had made it more difficult to fill vacancies,” IHS Markit said. “Looking ahead, manufacturers are confident about their prospects for output growth over the next 12 months, with the degree of positive sentiment the strongest since April.”

Regionally, manufacturers in Alberta and British Columbia saw by far the steepest improvement in business conditions, IHS Markit said, while Ontario was the weakest performing area, with manufacturing production broadly unchanged.