CANADA DATA: PMI Points To Ongoing Manufacturing Contraction

S&P Global's Manufacturing PMI dipped to 45.6 in June from 46.1 prior, suggesting no rebound in Canadian manufacturing through the end of a tariff-impacted Q2. This was a relapse after a 0.8pp rise in May, and the 5th consecutive contractionary (sub-50) reading, with the report (link here) noting production falling to a 5-year low (ie the early Covid pandemic) "amid a sharp decline in new work". 

• Per the report: "Tariffs were widely reported to have adversely impacted market demand, and overall sales declined for a fifth successive month. International sales, especially from the neighbouring US, were especially weak. Latest data showed that new export orders declined in June at one of the steepest rates in the survey history."
• Employment fell for a 5th consecutive month (reflecting both redundancies and attrition), with the decline in order backlogs accelerating.
• The brightest note in the report: "confidence in the outlook improved to its highest level since January, strengthening noticeably since May", but "compared to the survey’s historical average, confidence remained subdued. This was largely the result of difficulties in forecasting the direction of trade policies and tariff levels with the neighbouring United States."
• Price pressures appear to have abated slightly however: "Although the rate of inflation softened during June to a four-month low, it remained elevated compared to the survey trend. Manufacturers sought to pass on their higher input costs to clients via a rise in their own selling prices during June. Similarly, the rate of inflation remained marked, despite easing to a four-month low."