Canada manufacturing growth slows to two-year low in December

FILE PHOTO: Worker loads part for welding in robot bay at Alfield Industries, a subsidiary of Martinrea, one of three global auto parts makers in Canada, in Vaughan, Ontario, Canada April 28, 2017. REUTERS/Fred Thornhill/File Photo

TORONTO (Reuters) - Canada’s manufacturing sector expanded in December at the slowest pace in nearly two years as production growth faltered and export orders stagnated, data showed on Wednesday.

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 53.6 last month, its lowest since January 2017, from 54.9 in November.

A reading above 50 shows growth in the sector.

“December data signaled a loss of momentum for manufacturers at the end of the year, with stagnating export sales and softer energy sector demand the key factors behind an overall slowdown in production growth,” said Christian Buhagiar, president and CEO, Supply Chain Management Association (SCMA).

The output index fell to a 2-year low of 52.0 from 53.4 in November. Manufacturers reported that global trade frictions had held back export sales, IHS Markit said.

The new export orders index fell to 49.9, its lowest since November 2017, from 53.2 in November, while the employment index pulled back to 55.2 from a survey-record high of 57.1 in November.

There was evidence that less upbeat projections for output growth had slowed hiring at some firms, IHS Markit said. The measure of future output fell to 62.4, its lowest since February 2016, from 63.9.

Reporting by Fergal Smith, Editing by Chizu Nomiyama