April 1, 2019 / 1:43 PM / a year ago

Canada manufacturing growth hits 2-1/2-year low as export orders fall

FILE PHOTO: 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

TORONTO, (Reuters) - Canada’s manufacturing sector expanded in March at the slowest pace in two and a half years as a slowdown in global factory activity led to less new work from abroad, data showed on Monday.

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 50.5 last month, its lowest since September 2016, from 52.6 in February. A reading above 50 shows growth in the sector.

“The latest survey provides a clear signal that the recent global manufacturing slowdown has impacted on Canadian goods producers,” said Christian Buhagiar, president and CEO at Supply Chain Management Association (SCMA).

The measure of new export orders fell to its lowest in over four years at 47.6 from 51.1 in February. In addition to weaker global trade flows, pressure on export competitiveness from rising domestic raw material costs, particularly steel, were blamed by manufacturers for the drop, IHS Markit said.

Last year, Canada imposed tariffs on U.S. steel and aluminum in retaliation for U.S. tariffs.

The output index fell to 50.6, its lowest since October 2016, from 52.0 in February, while the measure of employment was also at its lowest in nearly two and a half years, at 51.1 from 53.7.

Manufacturers pointed to softer underlying business conditions that weighed on staff hiring and moved them to reduce stocks, IHS Markit said. The stocks of finished goods index fell for the fourth straight month at 45.5 from 46.9 in February.

Reporting by Fergal Smith; Editing by Chizu Nomiyama; fergal.smith@thomsonreuters.com; +1 416 941 8113

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