Canada factory activity shrinks for third straight month in June

FILE PHOTO: Production Associates inspect cars moving along assembly line at Honda manufacturing plant in Alliston, Ontario March 30, 2015. REUTERS/Fred Thornhill/File Photo

TORONTO (Reuters) - Canadian manufacturing activity contracted for the third consecutive month in June, as a measure of production fell to a three-and-a-half year low, data showed on Tuesday.

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, edged up to a seasonally adjusted 49.2 last month from 49.1 in May. A reading below 50 shows contraction in the sector.

In April, the index fell below 50 for the first time since February 2016. The three-month run of contractions is the longest stretch since the period between August 2015 and February 2016.

Manufacturers in the June survey reported more subdued economic conditions in both domestic and export markets and said that global trade frictions weighed on sales, according to IHS Markit.

The Bank of Canada has viewed a slowdown in the domestic economy in late 2018 and early 2019 as temporary, but it has worried about increased risks to global trade.

The measure of output fell to its lowest level since December 2015 at 47.7 from 48.6. Manufacturers pointed to a lack of new work to replace completed orders at their plants, IHS Markit said.

The new orders measure was in contraction for the fourth straight month in June, although the pace of decline eased. The measure rose to 48.9 from 47.8 in May.

Reporting by Fergal Smith; Editing by Chizu Nomiyama;; +1 416 941 8113