Canadian manufacturing continued to slide in December, though not in Ontario

RBC-PMI-ISM-manufacturing-sector-Canada-EDIWeekly

Manufacturing continues to take a hit on both sides of the Canada/US border, in part because of the slowing Chinese economy. The Royal Bank of Canada’s manufacturing purchasing managers’ index (PMI) fell to 47.5 in December, its lowest reading since 2010. A value of 50 is considered neutral. The senior vice president and chief economist at RBC, Craig Wright, said that the worst deterioration was seen in Alberta and British Columbia, while Ontario posted a “sustained rise” in output production. Measures of output, new orders, and employment were down, the result of weaker domestic demand and ongoing uncertainty in the energy sector. Wright added the usual rider that he expected the Canadian manufacturing sector to improve as the US economy strengthens.

However, manufacturers in the US have also seen business shrink. The Institute of Supply Management (ISM) index of factory activity, the US equivalent of the Canadian PMI, fell to 48.6 in November, its lowest level since 2009. As with the Canadian index, a reading of 50 is neutral.

Further complicating the manufacturing picture is the continuing slump in China, which, combined with the strong US dollar, has depressed US exports. Factory activity in China has contracted for ten straight months now, a fact that points to a global slowing of economic growth. Stock markets fell across the world on the news of China’s slide. The DOW Jones industrial average fell more than 400 points, while Chinese stocks lost 7 per cent of their value before trading was halted.

Exporters of commodities to China, including oil, copper and other metals, have been seriously affected by the slowdown there. Those countries, including Australia, Malaysia and Chile, have less money to spend on US goods, further reducing the US ability to export. Meanwhile US exports to China fell 4 per cent in the first ten months of 2015, compared to the same period a year ago. The “global spillovers” from China’s reduced rate of growth, which reached its slowest pace in six years in the third quarter of 2015, have been larger than was expected, according to the International Monetary Fund.

Did you miss this?

Other Popular Stories

  • Federal government urged to speak up for nuclear at Paris climate talks
  • Bombardier flies new CSeries jet for first time
  • Keystone: will it all come down to emissions?
  • British cheer awarding of train contract to Bombardier
  • CAE announces flight simulator contracts worth $130 million
  • Q1 Canadian corporate profits up, led by oil and gas
  • Expansion of wine and beer sales in Ontario grocery stores condemned by OPSEU
  • Space X Falcon Heavy launch live! 'Great rocket launch or the best fireworks display,' says Elon Musk. Watch the launch at 3pm today live on EDI Weekly
  • Canada's exports soared in June while imports fell
  • Detect lung cancer with a nanotech breathalizer? It works, four out of five times, could revolutionize cancer screening
  • CSeries engine problem just an oil seal leak: Pratt & Whitney
  • CSeries on track for 300 orders: Bombardier
  • Federal government must help Ontario close widening "skills gap" through immigration reforms
  • Montreal firm to build flight simulators for US Navy
  • Strong manufacturing helped grow economy in January
  • Local Ford union rebellion over GM contract threatens pattern bargaining
  • A supersonic jet with no front window? NASA's X-59 uses a 4K monitor instead.
  • Little certainty about toxicity of BPA in food cans despite new report
  • Three Out of Four Energy Companies Hit by Cyber-Attacks in the Last Year
  • Oil Industry News: Oil Companies Shedding Assets
Scroll to Top