The pace of growth in Canada's manufacturing sector eased in August for the second straight month as slower growth in new business offset the strongest expansion of production volumes in nearly eight years, data showed on Tuesday.
The IHS Markit Canada Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing business conditions, dipped to a seasonally adjusted 56.8 last month from 56.9 in July. It reached a survey-record high of 57.1 in June.
A reading above 50 shows growth in the sector.
"Canadian manufacturers continued to boost their production volumes in August," said Christian Buhagiar, president and CEO, Supply Chain Management Association (SCMA). "A slowdown in new business growth meant that the headline PMI dipped to a three-month low."
The output index climbed to its highest since December 2010 at 57.2, from 56.4 in July. Manufacturers pointed to rising customer demand and increased operating capacity at their plants, IHS Markit said.
The new orders index fell to 55.7, a four-month low, from 57.2 in July amid evidence that heightened business uncertainty and global trade tensions were holding back spending decisions.
Increased demand in the energy sector helped boost export sales but there were reports that US trade tariffs had dented competitiveness in the period, IHS Markit said. US tariffs on Canadian steel and aluminium went into effect on June 1.
"The latest survey highlighted that steel and aluminium tariffs pushed up input costs and acted as a headwind to export sales in US markets," Buhagiar said. The output prices index dipped to 61.3 from a survey-record high of 62.8 in July, while the input prices index rose to its highest in more than seven years at 73.7 from 71.6.
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