The latest survey released by IHS Markit revealed another slowdown in manufacturing activity growth during March, with overall business conditions improving at the weakest rate for two-and-a-half years.

The headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 50.5 in March, down from 52.6 in February. The reading signaled the slowest upturn in operating conditions across the manufacturing sector since September 2016.

According to the report, weaker production growth was a key factor behind the drop in the headline PMI during March. Output volumes rose at the slowest pace for almost two-and-a-half years due to fragile customer demand, especially from export markets.

March data also pointed to a fractional decrease in new orders received by manufacturing firms, which ended a 29-month period of sustained expansion, as well as only marginal growth of the rate of employment, the weakest for almost two-and-a-half years.