Canadian factory activity grows at slower pace as Omicron weighs - Reuters

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A shipping container is unloaded at the Port of Montreal in Montreal, Quebec, Canada, May 17, 2021. REUTERS/Christinne Muschi

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TORONTO, Feb 1 (Reuters) - Canadian manufacturing activity expanded at the joint-slowest pace in 11 months in January as material shortages and disruptions from the Omicron coronavirus variant held back output, data showed on Tuesday.

The IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 56.2 in January from 56.5 in December, matching July last year as the lowest reading since February 2021. A reading above 50 shows growth in the sector.

"COVID-19 yet again hit performance with output growth slowing notably," Shreeya Patel, an economist at IHS Markit, said in a statement.

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The output index fell to its lowest level since June 2020 at 51.5 from 53.3 in December as a lack of materials and the pandemic weighed on growth.

Canadian provincial governments have only just started to ease restrictions rolled out to slow the spread of the Omicron variant. read more

The restrictions as well as port congestions and adverse weather contributed to a deterioration in vendor performance.

The suppliers' delivery times index was at the fifth lowest in the 11-year history of the series, falling to 27.8 from 28.7 in December.

More encouragingly, there were signs of easing inflationary pressures, with the measure of input prices dropping to the lowest level in 11 months, and stronger demand.

"Fortunately, Canada boasts a high vaccination rate, which has allowed for growth to continue in the manufacturing sector despite a resurgence in cases," Patel said.

(This story corrects first paragraph to say January instead of December)

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Reporting by Fergal Smith Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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