TORONTO (Reuters) - Activity in Canada’s manufacturing sector slumped to a fresh record low in October, as heightened economic uncertainty and stubbornly low oil prices led to a sharp deterioration in business conditions.
The RBC Canadian Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 48.0 last month from 48.6 in September. A reading below 50 indicates a slowdown in the rate of growth.
The gauge has now come in below 50 in seven of the first 10 months of the year.
Output plunged to 46.0, its lowest ever reading, while a jump in input costs squeezed operating margins.
“The lack of spending by Canada’s oil and gas sector, and weak economic conditions abroad, made October a very tough month for Canada’s manufacturing sector,” said Cheryl Paradowski, chief executive officer of Canada’s Supply Chain Management Association.
Oil-exporting Canada has been hit by a slide in crude prices and the Bank of Canada has cut interest rates twice this year to try to stimulate the economy.
Paradowski said manufacturers in the oil-rich provinces of Alberta and British Columbia saw the sharpest falls in demand, while Ontario had performed better.
The forward-looking new orders component improved to 49.2 from 48.7, while the stock of purchases subindex fell to 44.5 from 45.3, its sharpest deterioration since the survey began in October 2010.
New export sales slipped for the first time since April.
Craig Wright, chief economist at RBC, said an improving U.S. economy and weaker Canadian dollar should fuel export demand and return the overall index to positive growth towards the end of the year.
Reporting by Alastair Sharp, Editing by Chizu Nomiyama