Canadian factory sector defies supply constraints as output climbs

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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

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TORONTO, Dec 1 (Reuters) - Canadian manufacturing activity expanded at a slightly slower but still robust pace in November as production accelerated in spite of severe supply bottlenecks, data showed on Wednesday.

The IHS Markit Canada Manufacturing Purchasing Managers' Index (PMI) dipped to a seasonally adjusted 57.2 in November from 57.7 in October, but staying well above the 50 threshold that marks growth in the sector.

The index has been above 50 every month since July 2020.

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"The penultimate month of 2021 continued to indicate strong growth in Canada's manufacturing sector," Shreeya Patel, an economist at IHS Markit, said in a statement.

"Production volumes increased strongly while sustained increases in domestic and international demand contributed to the sector's strong performance."

The output index rose to 54.1 from 53.9 in October, while the measure of pre-production inventories was at 54.4, dipping from 54.8, as manufacturers continued to build safety stocks in response to longer delivery times and material shortages.

The suppliers' delivery times index indicated the second-greatest deterioration of vendor performance in the 11-year history of the survey, while the measure of unfinished business climbed to a record high as goods producers struggled to keep up with demand.

"Growth has certainly been hindered by transportation bottlenecks, material scarcity and intense cost pressures, but firms remain confident that such issues will subside in 2022," Patel said.

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Reporting by Fergal Smith Editing by Chizu Nomiyama

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