TORONTO, Oct 1 (Reuters) - Canada's manufacturing sector contracted at a steeper pace in September as an uncertain trading environment weighed on production and new orders, data showed on Wednesday.
The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) fell to 47.7 in September from 48.3 in August, marking the eighth straight month that the index was below the 50 threshold. A reading below 50 indicates contraction in the sector.
“Latest data showed the continued underperformance of Canada’s manufacturing economy," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. "Output, new orders and exports all continued to fall, with the uncertain trading environment also leading firms to make cuts to purchasing, inventories and employment."
The output index fell to 46.4 from 47.4 in August and the new orders measure was at 46.1, down from 47.9.
Canada has been holding talks for months with Washington on a new economic and security relationship, with the aim of removing all U.S. tariffs on Canadian goods, but those talks have stalled.
Last week, Canadian Prime Minister Mark Carney said that trade negotiations with the U.S. were ongoing, and a lot of the remaining issues would move to a forthcoming review of the United States-Mexico-Canada trade agreement (USMCA).
“One of the positives from the latest report is a dissipation of price pressures, with both input costs and selling prices rising at slower rates," Smith said. "This will provide reassurance to Bank of Canada policymakers that a reduction in underlying inflation pressures is underway and provide further justification for September’s cut in interest rates.”
The input price index fell to 57.3 from 61.6 in August and the measure of output prices was at 51.2, its lowest level since October 2024.
Last month, the Bank of Canada lowered its benchmark interest rate by 25 basis points to 2.50%, its first cut since March.
Reporting by Fergal Smith; Editing by Chizu Nomiyama
