Canadian factory downturn lengthens as new orders hit a three-month low

By Fergal Smith

TORONTO, Jan 2 (Reuters) - Canada's manufacturing sector contracted for an 11th straight month in December as trade uncertainty contributed to a steeper decline in output and new orders, data showed ?on Friday.

The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) edged up to ?48.6 last month from 48.4 in November, extending its streak ?of readings below the 50 threshold ?since February. A ?reading below 50 indicates contraction in the sector.

"Canada's manufacturing economy ended the ?year on a subdued note," Paul ?Smith, economics director at S&P Global Market Intelligence, said in a statement. "Once again, tariffs remained an ?important theme amongst PMI ?survey ?respondents, with a general air of uncertainty continuing to negatively weigh on current and expected output levels for ?the year ahead."

Canadian Prime Minister Mark Carney has said a with the United States on key sectors was unlikely, saying the issue would be covered in a planned review of the United States-Canada-Mexico trade pact in 2026.

The ?output ?index fell to 47.8 from 48.0 in November and the new orders measure was at 47.3, ?marking a three-month low.

"Purchasing activity was also cut again in December, although supply-chain delays continue, and the price of inputs shifted higher - which firms once again closely linked to tariffs," Smith said.

The input price index rose to 56.9 from 56.6 ?in November, while the output price measure was at 54.7, its highest level since June, as firms tried to pass on higher input ?costs to clients. (Reporting by Fergal Smith; Editing by Chizu Nomiyama )