TORONTO (Reuters) - Canadian manufacturing growth slowed for a fifth straight month in November and hit a more than two-year low, according to data released on Monday, signaling the third quarter’s disappointing economic performance may persist for the rest of the year.
The RBC Canadian Manufacturing Purchasing Managers’ Index was 50.38 last month, compared with 51.39 in October. It was the weakest reading since data collection began in October 2010, and came dangerously close to contraction.
Still, the index was slightly above the 50 mark that separates expansion from deterioration.
“Minimal growth in the manufacturing sector in November likely reflects the continued global economic uncertainty,” Craig Wright, chief economist at Royal Bank of Canada, said in a statement.
“We expect the economic weak patch to be short-lived, however. As the downside risks plaguing the global economy start to ease, so will some of the weight on Canadian export demand and the broader manufacturing sector.”
The data showed manufacturing production and new orders both fell, pushing overall activity in the manufacturing sector closer to negative territory. Employers did create jobs in November, the report said, but the pace of growth slowed to a seven-month low.
“November was one of the most difficult months for Canadian manufacturers in the past two years,” said Cheryl Paradowski, chief executive at the Purchasing Management Association of Canada, which helps source the data. “This reflected weaker domestic and export market conditions. Nonetheless, firms continued to hire additional staff.”
The manufacturing data came after a government report on Friday that showed the Canadian economy grew by a meager 0.6 percent in July to September after two straight quarters of 1.7 percent expansion.
The third-quarter GDP data indicated that exports suffered their biggest drop in three years and businesses scaled back investments. The slowdown, however, is unlikely to knock the Bank of Canada off its rate-hike stance.
Canada fared better than most of its fellow wealthy industrialized countries in the aftermath of the 2007-09 global financial crisis, prompting the Bank of Canada in 2010 to become the first central bank in the Group of Seven to tighten monetary policy after the recession.
The Bank of Canada is still the only G7 central bank to have a tightening stance, although that stance has softened recently as Canadian policymakers have warned about Europe’s ongoing debt crisis, as well as the U.S. budget impasse.
Editing by Peter Galloway