IHS Markit Canada Manufacturing PMI®

Christian Buhagiar, President and CEO at SCMA said:

“The latest survey provides a clear signal that the recent global manufacturing slowdown has impacted on Canadian goods producers, with export sales falling to the greatest extent for just over four years in March.

“Subdued demand conditions placed a brake on both production growth and staff hiring across the manufacturing sector, which led to the slowest overall improvement in business conditions since September 2016.

“March data also pointed to a reduction in input buying and intensified efforts to streamline inventories in response to concerns about the near-term business outlook.

“A gradual slowdown in input cost inflation from the peaks seen last summer is a welcome development. However, manufacturers' operating margins remain under pressure amid weaker order flows and intense competition in key export markets."

Canadian manufacturers signalled another slowdown during March, with overall business conditions improving at the weakest rate for two-and-a-half years. The latest survey revealed softer rises in manufacturing output and employment levels in response to subdued demand conditions. Export sales were a particular drag on the sector in March, with new work from abroad falling to the greatest extent since February 2015.

At 50.5 in March, the headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index® (PMI®) was down from 52.6 in February and only slightly above the neutral 50.0 mark. The latest reading signalled the slowest upturn in operating conditions across the manufacturing sector since September 2016.

Weaker production growth was a key factor behind the fall in the headline PMI during March. Output volumes increased at the slowest pace for almost two-and-a-half years. Survey respondents cited fragile customer demand, especially from export markets. Some manufacturers also noted efforts to streamline their inventories of finished goods by cutting back on production schedules.

March data pointed to a fractional decline in new orders received by manufacturing firms, which ended a 29-month period of sustained expansion. The overall reduction was driven by the sharpest fall in new export work for just over four years. A number of respondents cited weaker global trade flows and pressure on export competitiveness from rising domestic raw material costs (particularly steel).

Subdued client demand resulted in a lack of work to replace completed projects during March. This was highlighted by a reduction in backlogs of work across the manufacturing sector for the first time in six months. Some goods producers responded to softer business conditions by paring back staff hiring at their plants. The rate of employment growth was only marginal and the weakest for almost two-and-a-half years.

A slowdown in new work also weighed on manufacturers' assessment of the year-ahead business outlook. The degree of positive sentiment towards future production growth was the second-weakest since August 2016.

The latest survey indicated greater efforts to reduce stocks in line with softer demand conditions. Post-production inventories declined to the largest extent since November 2017. At the same time, stocks of purchases fell at the fastest pace for just over three years.

Input buying decreased for the first time in 16 months, which mirrored the downward trend reported for stocks of purchases and in March. Softer demand for raw materials helped to alleviate pressure on supply chains, with vendor lead times lengthening to the least marked extent since November 2016. Moreover, input cost inflation eased again in March and reached its lowest for two-and-a-half years.


March data signalled a renewed slowdown in production growth across the Canadian manufacturing sector. The seasonally adjusted Output Index signalled the weakest rise in manufacturing production since the current phase of expansion began in November 2016.

Survey respondents commented on a soft patch for customer demand in March, particularly in export markets.

New Orders

The seasonally adjusted New Orders Index posted fractionally below the neutral 50.0 threshold in March, thereby ending a 29-month period of new business growth at manufacturing firms.

Reports from panel members cited subdued confidence among clients and falling export sales during the latest survey period.

New Export Orders

Manufacturers indicated a reduction in new work from abroad for the third time in the past four months. Moreover, the seasonally adjusted New Export Orders Index pointed to the fastest rate of decline since February 2015.

Anecdotal evidence cited weaker global trade flows and pressure on export competitiveness from rising domestic raw material costs (particularly steel).

Backlogs of Work

The latest survey highlighted a lack of new work to replace completed projects at manufacturing companies. This was signalled by a reduction in unfinished business for the first time since September 2018.

Moreover, the seasonally adjusted Backlogs of Work Index pointed to the greatest depletion of outstanding business since April 2016.

Stocks of Finished Goods

Post-production inventories decreased for the fourth consecutive month in March, with the latest fall the steepest since November 2017. Moreover, the seasonally adjusted Stocks of Finished Good Index was at its second-lowest since the survey began in late-2010.

A number of manufacturers commented on efforts to realign their inventories with softer client demand.


The rate of job creation at manufacturing firms continued to ease sharply from the survey-record high seen in November 2018.

Adjusted for seasonal influences, the Employment Index was only slightly above the 50.0 no change value and pointed to the weakest pace of workforce growth for almost two-and-a-half years. Survey respondents noted that softer underlying business conditions had weighed on staff hiring in March.

Quantity of Purchases

March data revealed a sustained soft patch for input buying across the manufacturing sector. The seasonally adjusted Quantity of Purchases Index dipped below the 50.0 no-change mark and pointed to the sharpest reduction in purchasing activity since the start of 2016.

Lower volumes of input buying were attributed to subdued demand and efforts to streamline inventories during the latest survey period.

Suppliers’ Delivery Times

Weaker demand for manufacturing inputs helped to alleviate pressure on supply chains in March. Adjusted for seasonal influences, the Suppliers' Delivery Times Index reached its highest level since November 2016. The latest reading signalled only a modest lengthening of average lead times.

Where a downturn in supplier performance was reports, manufacturers mainly cited low stocks among vendors and international shipping delays.

Stocks of Purchases

Manufacturing companies continued to tighten their inventories in March, with the seasonally adjusted Stocks of Purchases Index pointing to the fastest rate of reduction for just over three years.

Anecdotal evidence from survey respondents suggested that pre-production inventories had been lowered in response to weaker order books and heightened uncertainty about the demand outlook.

Input Prices

Average cost burdens continued to rise in March, but the rate of inflation moderated further from the peaks seen last summer. Adjusted for seasonal influences, the Input Prices Index pointed to the weakest rate of cost inflation for two-and-a-half years.

Where an increase in operating expenses was reported, survey respondents mainly cited the inflationary impact of trade tariffs on steel and aluminium.

Output Prices

The seasonally adjusted Output Prices Index signalled only a marginal increase in factory gate charges across the manufacturing sector in March. Moreover, the latest rise was the weakest since October 2016.

Softer output price inflation was linked to competitive pressures and slower rises in input costs during March.

Future Output

March data indicated a setback for business optimism, following the gradual recovery seen in the opening months of 2019. The Future Output Index dropped to its second-lowest level since August 2016.

Manufacturers commented that delayed decision-making among clients and concerns about the wider economic outlook had held back business optimism.


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