By Fergal Smith
TORONTO (Reuters) -The downturn in Canada’s manufacturing sector deepened in June as U.S. tariffs undercut demand, spurring the sharpest cut to output in five years, data on Wednesday showed.
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) edged down to 45.6 in June from 46.1 in May, registering the fifth straight sub-50 reading. A level below 50 indicates contraction in the sector.
“Canada’s manufacturing economy continued to struggle in the face of tariffs and the ongoing uncertainty related to future trade policies,” Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
“A lack of new orders underpinned the latest downturn and helped to explain the steepest reduction in production since the height of the pandemic in the spring of 2020.”
International orders were particularly weak, with the New Export Orders Index falling to 40.2 from 42.0 in May. The output measure was at 42.6, down from 45.2, posting its lowest level since May 2020.
Canada sends about 75% of its exports to the United States. It has escaped broad U.S. tariffs imposed in April but faces 50% duties on steel and aluminum exports south of the border.
“Although sentiment improved on hopes of some stability in the year ahead, confidence in the outlook remains subdued and uncertain,” Smith said.
“Tariffs again drove steep rises in prices and also exacerbated supply-side delays, which intensified during June.”
Average lead times for the delivery of inputs lengthened for a 12th straight month and firms continued to reduce their input inventories.
The Stocks of Purchases Index declined to 44.6 from 46.2 in May, posting a five-year low.
(Reporting by Fergal Smith; Editing by Chizu Nomiyama)
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