According to statistics released on Monday, Canadian industrial activity slowed down in June as a result of inflationary pressures, a lack of raw materials, and a decrease in employers’ expectations for future output.
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 54.6 in June, its lowest level since January 2021, from 56.8 in May. A rating over 50 indicates industry development.
Canadian manufacturing showed symptoms of trouble in June, according to a statement from Shreeya Patel, an analyst with S&P Global. The root of the problem was “global supply concerns and sharp pricing pressures, which are projected to upset the industrial economy this year.”
The output indicator dropped from 55.6 in May to 50.9, its lowest level since June 2020, as a result of a decreased flow of new business, material delays, and increased expenses.
Manufacturers said that price increases prevented some customers from making orders, and that a fall in global demand was caused by the conflict in the Ukraine and sluggish demand from Europe and Asia.
As the war and China’s COVID-19 lockdowns worsen supply shortages, economists have lowered their predictions for the global economy in recent weeks, increasing the likelihood that central banks, including the Bank of Canada, would rapidly raise interest rates to combat the inflationary crisis.
“A decline in confidence shows businesses are aware of the actual challenges that the global economy may face over the next 12 months. Companies are now required to prepare for more adversity after recovering successfully from the epidemic “added Patel.
Future production indicator hit its lowest level in 17 months.