Workers make jackets at the Canada Goose factory in Toronto.
Canadian manufacturing activity contracted at a slightly faster rate in December due to an uncertain economic outlook and high inflation undercut demand, while the recent trend of easing cost pressures reversed, according to data released on Tuesday.
The S&P Global Canada Manufacturing Purchasing Managers' Index fell to 49.2 in December from 49.6 in November.
It was the fifth month that the index was below the 50 threshold that marks the contraction in the sector. It's the longest decline since a seven-month stretch from August 2015 to February 2016, according to S&P Global.
The Canadian manufacturing economy turned in another relatively subdued performance as the year 2022 closes, according to Paul Smith, economics director at S&P Global Market Intelligence.
Firms reported that the weakness of market demand reflected both the negative impact of high inflation and the ongoing uncertainty. The output index fell to a four month low of 47.1 from 49.0 in November, while the measure of new orders went up only slightly to 47.0 from 46.8.
Purchasing activity was the lowest since June 2020, as firms tried to reduce existing inventory. The average lead times for the delivery of inputs continued to deteriorate.
Price stickiness remains a concern for companies because of supply constraints, according to Smith.
The input price index went up to 61.5 in December from 60.9 in the previous month, after declining for five consecutive months. The output price of output went up as well.