Canadian factory sector activity slows for fourth month

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

TORONTO, Dec 1 (Reuters) - Canadian manufacturing activity weakened for a fourth straight month in November as worries that the economy would slip into recession undercut demand, but the pace of contraction and a measure of inflation pressures eased, data showed on Thursday.

The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 49.6 in November from 48.8 in October.

A reading of less than 50 shows contraction in the sector. It has been below that level each month since August.

"Against a backdrop of high inflation and ongoing macroeconomic uncertainty in product markets, November's PMI data signalled that operating conditions in Canada's manufacturing sector remained challenging," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.

The new orders component, at 46.8, was in contraction for a fifth month, pressured by high inflation, product shortages and worries over economic recession.

"Both output and new orders continued to fall, although perhaps of some comfort is that the degrees of decline were softer than in October," Smith said.

"Moreover, cost inflation continues to ease as lower prices for several goods slowly make their way down the supply-chain, whilst several firms added to their staffing numbers as they sought to address labour shortages at their plants."

The employment measure rose to 51.1, its first move above the 50 threshold since July, while the input prices index was at its lowest level in two years, dipping to 60.9 from 61.7 in October.

The Bank of Canada has been raising interest rates aggressively to reduce inflation. Further tightening is expected from the central bank at a policy decision next Wednesday.

Reporting by Fergal Smith; Editing by Chizu Nomiyama

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