July 3, 2018 / 1:38 PM / 4 months ago

Canada manufacturing growth hits survey-record high in June: Markit

TORONTO, (Reuters) - Growth in the Canadian manufacturing sector accelerated in June to its fastest pace in more than seven years, data showed on Tuesday, hitting the highest since the survey began in October 2010 as output and new orders rose.

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. REUTERS/Candace Elliott

The IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI), a measure of manufacturing business conditions, rose to a seasonally adjusted 57.1 last month from 56.2 in May.

A reading above 50 shows growth in the sector.

Output rose to 56.1, its highest since January, from 54.0 in April. It was boosted by increased capacity and rising workloads, IHS Markit said.

New orders climbed to the highest level since November 2013 at 57.7 from 56.6 the month before.

“Survey respondents commented on a general upswing in customer demand and ongoing efforts to boost production capacity,” said Tim Moore, associate director at IHS Markit.

“Manufacturers also suggested that part of the rise in new work reflected efforts by clients to complete orders and boost their inventories in advance of surcharges on steel and aluminum,” Moore said.

Canada struck back at U.S. steel and aluminum tariffs on Friday, vowing to impose punitive measures on C$16.6 billion of American goods.

Stocks of purchases and backlogs of work also reached a survey-record high. Survey respondents said that high levels of capacity utilization and delays in the receipt of materials from suppliers had led to an accumulation of unfinished work at their plants, according to IHS Markit.

Rising pressure on capacity was reported by companies in the Bank of Canada Business Outlook Survey, which was released on Friday.

Money markets expect the central bank to raise its benchmark interest rate, which sits at 1.25 percent, this month for the fourth time since July last year.

Reporting by Fergal Smith; editing by Susan Thomas

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