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Canada manufacturing growth cools in October, export orders contract

OTTAWA - The pace of growth in the Canadian manufacturing sector slowed to a nine-month low in October as firms' supply chains were disrupted by a hurricane in the United States and as new export orders contracted, data showed on Wednesday.

The Markit Canada Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing business conditions, declined to a seasonally adjusted 54.3 last month from 55.0 in September, the lowest level since January. A reading above 50 shows growth in the sector.

The manufacturing sector continued to feel the effects of Hurricane Harvey, which hit Texas in late August, the report said. This meant longer supplier delivery times for Canadian firms, with the gauge contracting further to 40.4 from 40.6.

Supply shortages due to the hurricane also kept costs elevated, with the measure of input prices holding at 62.6.

Forward-looking new orders declined to 53.2 from 54.9, while new export orders contracted to 49.8 from 51.3 as firms cited less international demand. It was the first time export orders have fallen below 50 since last October.

A slowdown in the manufacturing sector is in line with expectations that the broader Canadian economy will slow in the second half of the year following strong growth in the first half.

Still, the measure of manufacturing employment rose to 55.4 from 54.4 as backlogs of work increased to 51.5 from 50.8, suggesting firms' capacity was being pressured.

Posted by BNN