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Canadian manufacturing activity increases at a record pace in December - Reuters News

Canadian manufacturing activity increases at a record pace in December - Reuters News

TORONTO, Jan 4 (Reuters) - Canadian factory activity expanded at its fastest pace on record in December as new orders and production climbed, while manufacturers grew more optimistic that output would continue to rise in 2021, data showed on Monday.

The IHS Markit Canada Manufacturing Purchasing Managers' index (PMI) rose to a seasonally adjusted 57.9 in December from 55.8 in November, the sixth straight month that the PMI was above the 50 threshold that marks expansion in the sector.

It was the highest level for the index since the survey began in October 2010.

The data "indicated the Canadian manufacturing sector concluded 2020 with a record month-on-month improvement in business conditions," Shreeya Patel, an economist at IHS Markit, said in a statement. "New orders and output supported the latest rise with robust increases registered."

Demand conditions continued to improve in both domestic and foreign markets, said IHS Markit, adding that the rise in new work from abroad was attributed by purchasing managers to rising demand from clients in the U.S. and Asia.

Increased manufacturing workloads contributed to the strongest job creation in over two years, IHS Markit said. Less encouraging was mounting capacity and supply chain pressures, with the latter often linked by manufacturers to coronavirus-related restrictions.

"Relatively high virus case numbers still pose a threat to the industry should restrictions tighten again," said Patel.

A number of Canadian provinces have announced tighter economic restrictions as a second wave of coronavirus sweeps across Canada. (Full Story)

Still, the data showed that Canadian manufacturers remain upbeat about their prospects for growth over the next 12 months. The measure of future output rose to a three-month high of 64.1 from 62.9 in November.

U.S. final manufacturing PMI ends 2020 at 6-year high - IHS Markit - Reuters News

Jan 4 (Reuters) - U.S. manufacturing activity picked up at its briskest pace in more than six years in December, extending a recovery in the factory sector that has spurred the strongest pricing environment for goods producers since 2011 as the coronavirus pandemic upends supply chain networks.

Still, IHS Markit's final manufacturing purchasing managers' survey of a rocky 2020, released on Monday, showed the sector's rebound was uneven. Consumer goods makers saw weaker order flow as COVID-19 infections surged and limited consumer spending, while producers of machinery and equipment noted strong demand in a potential sign of improving business investment, said Chris Williamson, Chief Business Economist at IHS Markit.

IHS Markit said its manufacturing PMI climbed to 57.1 in December from 56.7 in November. The index also improved from its preliminary - or "flash" - reading in mid-December of 56.5, with a reading above 50 signaling expansion in activity.

The index finished 2020 at its highest level since September 2014, with December's gain marking the eighth straight month of improvement after plunging to its lowest in more than a decade in April when the first rounds of business shutdowns to contain COVID-19 were in full swing.

With output moderating to 58.3 last month from 59.2 in November, the headline index's improvement was driven largely by a strong pricing environment, IHS Markit said. Its output price index rose to its highest since May 2011.

"Amid a significant deterioration in vendor performance, cost burdens and selling prices soared, as firms sought to partially pass on higher input prices," IHS Markit said in a statement. "Output expectations moderated slightly, however, as the post-election spike eased and virus cases surged once again."

China's Dec factory activity growth slows, higher costs hit firms - Reuters News

BEIJING, Jan 4 (Reuters) - Activity in China's factory sector rose in December as the world's second-largest economy sustained its recovery to pre-pandemic levels, a business survey showed on Monday, however, increasing cost pressures slowed the pace of expansion.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) fell to 53.0 from November's 54.9, with the gauge staying well above the 50-level that separates growth from contraction but missing expectations and easing to the softest pace in three months.

Analysts polled by Reuters had forecast the headline reading would slip to 54.8.

China's vast industrial sector has staged an impressive recovery from the coronavirus shock thanks to surprisingly strong exports. The economy is expected to expand around 2% for the whole of 2020 - the weakest pace in over three decades but much stronger than other major economies still struggling to contain infections.

However, tougher coronavirus control measures in many of its key trading partners in the west could dent industrial demand, weighing on the recovery.

The Caixin PMI reading comes after an official gauge of factory activity, focusing more on larger and state-owned firms, also moderated but remained strong. (Full Story)

"The negative impact of the pandemic on the domestic economy further subsided and the manufacturing industry continued to recover. Both the supply and demand sides continued to improve. Overseas demand also steadily increased," Wang Zhe, senior economist at Caixin Insight Group, wrote in a note accompanying the survey release.

The private sector survey also showed input prices rose sharply, at the fastest pace since 2017, with pricier raw materials, especially metals, blamed for the increase. Chinese factories also laid off more workers than they hired for the first time in four months, although the decline was modest.

"We need to pay attention to the mounting pressure on costs brought by the increase in raw material prices and its adverse impact on employment, which is particularly important for the design of the exit from stimulus policies implemented during the epidemic," said Wang.

Gauges of both total new orders and factory output slipped from November's but remained strong. Growth in new export orders also slowed.

"We expect the economic recovery in the post-epidemic era to continue for several months, and macroeconomic indicators will be stronger in the next six months, taking into account the low bases in the first half of 2020," said Wang.

Euro zone manufacturing ends 2020 on high as German factories hum -PMIs - Reuters News

LONDON, Jan 4 (Reuters) - Manufacturers in the euro zone ended 2020 on a high, with activity in the sector increasing at its fastest pace since mid-2018, suggesting the bloc's economy was less hard hit by the pandemic than earlier in the year, a survey showed.

Germany was again the driving force and in contrast to the bloc's dominant service industry - which has been particularly badly impacted by lockdown measures to tackle the coronavirus - factories in the region have mostly remained open.

IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) rose to 55.2 in December from November's 53.8, although that was below the initial 55.5 "flash" estimate.

Anything above 50 indicates growth, and December was the highest reading since May 2018. An index measuring output, and which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, rose to 56.3 from 55.3.

"The economy consequently looks set to be hit by the pandemic in the fourth quarter far less than the unprecedented decline in the second quarter thanks to the resilience of manufacturing," said Chris Williamson, chief business economist at IHS Markit.

Although the euro zone economy likely contracted again last quarter as renewed lockdown measures stifled activity, a December Reuters poll suggested the bloc's GDP will return to pre-crisis levels within two years. ECILT/EU

New orders increased amid strong demand for German goods and in part reflecting a temporary spike in British demand prior to the end of the Brexit transition period.

But despite strong demand and factories building up a backlog of orders at one of the sharpest paces in nearly three years, headcount was reduced again last month, albeit at a slower pace. The employment index nudged up to 49.2 from 48.7.

"Employment continued to be cut, but this follows a similar pattern to the recovery from the global financial crisis, with the job market improvement coming later than the rise in production," Williamson said.

"Assuming output growth can be sustained, jobs should soon follow."

UK factory PMI hits three-year high in December - IHS Markit - Reuters News

LONDON, Jan 4 (Reuters) - A closely watched gauge of growth in British manufacturing activity rose to its highest level in three years last month, as factories rushed to complete work before the end of the post-Brexit transition period on Dec. 31.

The IHS Markit/CIPS manufacturing Purchasing Managers' Index (PMI) for December rose to 57.5 from November's 55.6, its highest since November 2017 and slightly above an initial flash estimate of 57.3.

The most recent official data, for October, showed factory output was 7.1% lower than a year earlier, largely due to reduced demand in consumer-facing industries as a result of COVID-19 shutdowns.

IHS Markit director Rob Dobson said he did not think December's surge in activity would last.

"Customers, especially those based in the EU, brought forward purchases, boosting sales temporarily. It seems likely that this boost will reverse in the opening months of 2021, making for a weak start to the year," he said.

Prime Minister Boris Johnson reached an eleventh-hour deal with the European Union on Dec. 24, averting tariffs on goods trade with the EU. However, trade between the two economic areas will still face significant extra paperwork from Jan. 1.

The survey showed manufacturers stockpiled materials at the fastest rate since March 2019 - when there were also fears of disruption to trade with the EU - and that delivery times were the slowest since the initial lockdown in April and May.

Throughout December there were delays at British ports, culminating in a lengthy blockage at Dover just before Christmas after France shut the border following the identification in Britain of a new, more infectious, variant of the coronavirus.

The IHS Markit survey took place between Dec. 4 and Dec. 18, before the French action.

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