December 2022 Purchasing Managers’ Indices (PMIs): Canadian manufacturers facing challenging operating conditions
Canada’s PMI closed the year with a subdued performance.Mahmoud Khairy, Economist, Canadian Chamber of Commerce
High inflation and weakening demand continue to take a toll on the manufacturing sector, where firms are raising recession worries.
- In December, Canada’s Manufacturing Purchasing Managers’ Index (PMI) reading of 49.2 signaled a mild contraction, down slightly from 49.6 in November. Canada’s PMI has been below the 50 “no-growth” threshold for five straight months, which suggests weak conditions and negative growth for the sector to start 2023.
- The main factors dragging down the index are output, new orders and purchasing activity, reflecting subdued demand amid persistent uncertainty, as firms are raising fears of recession. On the plus side, employment surprisingly increased (albeit only slightly) reflecting difficulties in recruiting.
- Globally the manufacturing sector has been contracting over the last four months. Advanced economies are a bit worse than emerging markets, but the slowdown is broad-based across countries.
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