Canada manufacturing growth hits two-year low as trade tensions bite

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

TORONTO, (Reuters) - Canada’s manufacturing sector expanded in January at the slowest pace in more than two years as global trade frictions dulled customer demand in export markets, data showed on Friday.

The Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 53.0 last month, its lowest since December 2016, from 53.6 in December. A reading above 50 shows growth in the sector.

The measure of output also touched a 25-month low, dipping to 51.9 from 52.0 in December.

“January data highlights that the manufacturing sector got off to a slow start in 2019, with the loss of momentum centered on the weakest increase in new business volumes for more than two years,” said Christian Buhagiar, president and CEO at Supply Chain Management Association (SCMA).

“Survey respondents noted that global trade frictions and subdued business confidence among clients had once again acted as a brake on client demand.”

Last week, the International Monetary Fund said failure to resolve trade tensions could further destabilize a slowing global economy.

The new orders index fell to 51.4, its lowest since October 2016, from 53.3 in December, while the measure of new exports revealed contraction for the second straight month.

Still, the employment index rose to 55.4 from 55.2 in December, helped by hopes of a rebound in demand this year.

Positive sentiment was also reflected in the measure of future output, which climbed to its highest since August at 65.1. It was 62.4 in December.

Reporting by Fergal Smith, Editing by Chizu Nomiyama