TORONTO, Dec 2 (Reuters) - Canadian manufacturing activity increased at the fastest pace in 21 months in November as the Bank of Canada's interest-rate cutting campaign boosted domestic demand and despite port strikes that worsened delivery delays, data showed on Monday.
The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) rose to 52.0 in November from 51.1 in October, its highest level since February 2023 and the third straight month above the 50.0 no-change mark.
A reading above 50 indicates expansion in the sector.
"Output and new orders both rose at stronger rates when compared to October, with firms noting an uplift in domestic market activity, linked in part to recent reductions in interest rates," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
"In contrast, subdued global demand continued to weigh on overall sales."
The Canadian central bank has cut its benchmark interest rate by one and a quarter percentage points since June, lowering the rate to 3.75%. Investors expect further easing in a policy decision on Dec. 11.
The output index rose to 53.1 from 52.2 in October, while the new orders measure was at 52.7, up from 50.5. New export orders declined for the 15th successive month.
Canada sends about 75% of its exports to the United States, so its economy could be harmed if U.S. President-elect Donald Trump follows through on a pledge to impose a 25% tariff on imports from Canada and Mexico.
Average lead times for the delivery of inputs lengthened for the fifth straight month and by the most since August, which firms put down to rail delays and port stoppages.
Earlier this month, Canada moved to end labor disputes at the country's biggest ports, including Vancouver and Montreal, citing economic damage.
A stronger U.S. dollar - the greenback notched a 4-1/2-year high against its Canadian counterpart last Tuesday - helped raise the price of imported goods, firms said.
Input cost inflation accelerated to its highest level since April 2023. The output price index also rose but remained below its recent peak in August.
Reporting by Fergal Smith; Editing by Chizu Nomiyama
