Manufacturing growth picks up, but inflationary pressures intensify

the nineteenth consecutive month. The index signalled a robust improvement in manufacturing

business conditions, although the strength of the recovery remained slightly softer than April’s six-year peak.

A key factor behind the rise in the headline PMI since August was faster rates of output and new order growth. Reports from survey respondents cited improving client demand, a supportive economic backdrop and successful product development. While manufacturing companies generally commented on resilient domestic demand, some also noted that subdued export sales had held back growth in September. Latest data indicated only a marginal rise in new orders from abroad, which was partly linked to weak demand from U.S. clients.

Canadian manufacturers indicated a solid degree of job creation in September, although the rate of employment growth eased from August’s survey-record high. Survey respondents commented on renewed efforts to boost capacity in response to rising demand, although some noted that skill shortages had made it more difficult to fill vacancies. Looking ahead, manufacturers are confident about their prospects for output growth over the next 12 months, with the degree of positive sentiment the strongest since April.

Meanwhile, input cost inflation reached its highest level for four months in September, which

manufacturers overwhelmingly linked to rising raw material prices. A number of firms noted that U.S. supply disruptions had pushed up prices for chemicals, fuel and metals.