Canadian Manufacturing Begins the V-Shape Recovery, But Will It Last?

Canadian Manufacturing posted a sharp increase for may, but it still remains in contraction

Let's hope manufacturing increases above 50 points in June

Canada went into lock-down in mid-March, around the same time as the US. As with all other major economies, apart from China which bounced back pretty quick, the coronavirus lock-down proved to be detrimental for the Canadian. Manufacturing dived to the lowest levels ever, as did services which dived even lower.

Many were hoping for a v-shape recovery when the lock-down ended in 2 weeks or a month maximum. But it lasted for nearly 3 months, so the recovery was put into question. Although, today we saw a reversal in Canadian manufacturing activity for May. Below is the Canadian manufacturing report for May.

Manufacturing PMI in May for Canada

  • May PMI for May 40.6 vs. 33.0 last month
  • New orders rise to 37.9 vs. 23.9 in April
  • Employment rises vs. the prior month

The PMI indicator rose to 40.6 points from 33 points in April. But that still means contraction and is a long way away from coming back to expansion above 50 points. So, the v-shape recovery is not full yet and no-one expected it to be in May.

But this is a good sign, since the reversal higher looks pretty sharp, together with other components of this report. Let’s hope it continues like this in the coming months, with June in particular expected to show a jump, since the re-opening is already underway.

 

ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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