Canada’s manufacturing activity rose to its highest level in five months during August.
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) increased to 49.5 in August, its highest level since March of this year, and up from 47.8 in July.
However, despite the increase, August marked the 16th consecutive month that the PMI was below the 50 mark, the longest such stretch in data going back to 2010.
A PMI reading below 50 indicates contraction in the manufacturing sector, while a level above 50 demonstrates growth.
While analysts say they are beginning to see stabilization after a prolonged downturn, Canada’s manufacturing sector continues to be held back by several factors.
Issues impacting manufacturing include unfavorable exchange rates and higher shipping costs.
Consequently, employment in the manufacturing sector is on the decline.
The Canadian dollar continues to fluctuate widely, which can hurt demand for Canada’s manufactured exports.
After declining to a two-year low against the U.S. dollar in August, the Canadian dollar has since rebounded and strengthened in recent weeks.
A weaker Canadian dollar is seen as more advantageous for Canada’s export sector.
