Stronger demand boosts operating conditions
- September 1, 2021
Canadian manufacturers recorded another robust expansion in August, with the IHS Markit Canada Manufacturing PMI at a four-month high—and the fourth-quickest growth in 11 years.
Key findings for August:
- PMI improves to fourth-highest in series history
- Production volumes at Canadian manufacturers rise sharply
- Supplier delivery delays worsen, prompting advance input buying
- Input price inflation strengthens to new series high amid shortages
The headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) registered 57.2 in August, up from 56.2 in July.
Quicker upticks in output, new orders, exports and purchases underpinned growth and in turn supported optimism. However, delivery delays were again a problem, with lead times lengthening markedly. Because of this, firms sought to protect against future shortages by building pre-production inventories—but consequently faced steep cost pressures.
The latest reading extended the period of growth to 14 successive months, with the latest expansion the fourth-quickest in the near 11-year history of the survey. Production volumes at Canadian manufacturers rose at a sharp and accelerated pace. Firms often reported that greater demand combined with larger workforces allows firms to raise output volumes.
Around 23 per cent of firms increased production in August compared to July, compared with 11 per cent reporting declines. Similarly, higher sales to both international and domestic markets resulted in a marked uptick in new orders. Firms mentioned a general improvement in customer demand. Higher sales to US and European markets also drove the increase, according to panellists.
Higher output requirements and rising backlogs resulted in additions to headcounts in August, bringing the current period of job creation to 14 months. The rate of increase moderated slightly from July but remained higher than the long-run series average. Some firms found it difficult to source skilled replacements for voluntary leavers, however.
Survey data were collected August 12-24.
Read the full report.