Canada: S&P Manufacturing PMI drops to 48.7 in August vs. 53.6 expected

• Canada S&P Global Manufacturing PMI fell into contraction territory below 50 on in August.
• USD/CAD clings to daily gains above 1.3150 after the data.

The business activity in Canada's manufacturing sector contracted in August with the S&P Global Manufacturing PMI dropping to 48.7 from 52.5 in July. This reading missed the market expectation of 53.6 by a wide margin.

Commenting on the data, "latest PMI data highlighted further concern for Canada's manufacturing sector midway through Q3 as high inflation and concerns over the long-term outlook hit demand hard," said Shreeya Patel, Economist at S&P Global Market Intelligence. "Both output and new orders fell at quicker rates while employment levels declined for the first time since the start of the pandemic over two years."

Market reaction

The USD/CAD pair edged slightly higher with the initial reaction to the disappointing data and was last seen rising 0.3% on the day at 1.3167.