The decline in the global manufacturing PMI to a two-year low in January suggests that prospects for Canadian exporters have deteriorated further. On past form, the global PMI is broadly consistent with a stagnation in non-energy exports. Worse still, the available national preliminary manufacturing PMIs for February point to a further fall in this month, especially as the manufacturing PMI for the US dropped to a 17-month low. The weaker global backdrop could hardly come at a worse time for Canada. Transportation constraints are hampering prospects for energy exports, while domestic demand growth is faltering. We still think that net exports will boost GDP this year, but only because weakening consumer spending and investment growth will cause import growth to lag behind export growth.
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