March 2023: PMIs: Canadian manufacturers continue to recover

The good news continues for Canada’s manufacturing sector, as the PMI topped the 50-mark for the second straight month. The increase to 52.4 in February was the highest reading since July. The sector looks to be improving, as supply chains stabilize and inflation pressures ease. Growth in new orders is also welcome news and signals a decent start to the year.

– Mahmoud Khairy, Economist, Canadian Chamber of Commerce

KEY TAKEAWAYS

• For the second month in a row Canada’s manufacturing Purchasing Managers’ Index (PMI) reported a reading above the no-growth threshold of 50. Rising to 52.4 in February from January’s 51.0, this marks the highest level since July 2022.
• Growth in the manufacturing sector in 2023 continues to be led by domestic demand, as new export orders fell for the third consecutive quarter.
• Firms are drawing down their existing inventories of finished goods, while in tandem adding more jobs to meet increased production demands.
• Looking across advanced economies, Canada is looking like the lone bright spot, as the PMIs in the U.S. and Europe remain below 50.
• China’s economic rebound is showing up in the data, after their decision to lift covid-zero policies. Fluctuations in emerging markets are expected to continue, but they are leading the pack for the time being.

SUMMARY TABLE