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Canadian factory activity accelerates to 2-year high in September

FILE PHOTO: Workers are seen at Bri-Steel Manufacturing, a manufacturer and distributer of large diameter seamless steel pipes, in Edmonton, Alberta, Canada June 21, 2018. Picture taken June 21, 2018. REUTERS/Candace Elliott

TORONTO (Reuters) - Canadian manufacturing activity expanded in September at its fastest pace in more than two years as easing of COVID-19 restrictions helped boost demand from both domestic and export markets, data showed on Thursday.

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) rose to a seasonally adjusted 56.0 in September, its highest level since August 2018, from 55.1 in the prior month. A reading above 50 indicates expansion in the sector.

It was the fifth straight month that the index has climbed. It bottomed at a record low of 33.0 in April, when businesses were closed to help contain the coronavirus pandemic.

“Overall, the health of the Canadian manufacturing sector continued to strengthen in September, as has been the case throughout the third quarter,” Shreeya Patel, an economist at IHS Markit, said in a statement.

A strong increase in workforce numbers suggested “a commitment towards expanding production schedules in the months to come,” said Patel.

The employment index rose to 54.3 from 53.8 in August, while the measure of new orders was at its highest level since June 2018 at 57.7, up from 55.0. New export orders expanded for the second straight month.

Still, the pandemic continued to disrupt supply chains. The index of suppliers’ delivery times edged up to 38.0 from 37.4 in August, holding well below the 50 threshold.

Canada has seen a resurgence of coronavirus cases in recent weeks. But economists expect activity to suffer a smaller hit than earlier this year, as provinces strive to avoid broad-based lockdowns and take targeted measures to deal with outbreaks.

Data on Wednesday showed that gross domestic product continued to rebound in July and August but was still about 5% below pre-pandemic levels.

Reporting by Fergal Smith; Editing by Chizu Nomiyama

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