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Canadian manufacturing sector contracts in August as new orders fall

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Canadian manufacturing sector contracts in August as new orders fall

The Canadian manufacturing sector contracted in August amid a sharp decline in new orders, data from an IHS Markit survey showed.

The seasonally adjusted Purchasing Managers' Index for Canadian manufacturing came in at 49.1 in August, down from 50.2 in July and marking the lowest reading in three months. A print below 50 reflects contraction, while a reading above that indicates expansion.

A sustained reduction in new order intakes was a key factor pulling down the headline index, IHS said. New work has been declining for the past six months, with August seeing the sharpest fall since December 2015.

Trade tensions between the U.S. and China, weak energy sector spending and global economic uncertainty all weighed on client demand, according to the survey.

Production volumes dropped for the 5th straight month amid the decline in new work, while backlogs fell sharply and hiring eased since July. Business optimism was at its lowest level since February 2016.