Canada's manufacturing sector fell to its lowest level since shortly after the start of the COVID-19 pandemic on Monday, as weak market demand weighed on production and new orders.
The S&P Global Canada Manufacturing Purchasing Managers' index fell to a seasonally adjusted 47.5 in September, its lowest level since May 2020, from 48.0 in August.
A reading below 50 indicates contraction in the sector. Since May, PMI has been below that level.
S&P's Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
'Use production and new orders both fell to steeper degrees amid evidence of slow market demand.
The output index dropped to its lowest level since August 2022 at 45.6 from 47.7 in August. The employment index also fell, with the new orders at 46.9, down from 47.7 in the previous month, while the employment index showed staffing levels declining for a fifth consecutive month.
Smith said the decision to keep its main policy rate unchanged was a reversible decision.
The Canadian central bank maintained its key interest rate at 5 percent in September, noting the economy had entered a period of weaker growth.
As firms focus on reducing excess inventory at their plant, purchasing activity was cut down. Signals that cost pressures were stabilizing provided some encouragement, with the input price index dipping to 50.4 from 53.9 in August.