Canada’s Ivey Purchasing Managers’ Index fell for a second month in a row to 50.0 in December from 56.9 in November.

RBC Financial Group says that the 50.0 reading was below expectations and is the lowest in five months. “It sits right on the line between expansion and contraction, confirming that Canadian manufacturing activity slowed going into year-end,” it says, noting that the prices index rose while the employment index fell below the 50 mark.

“While the domestic economy is still healthy, manufacturers and exporters are feeling some effects from the weak U.S. fourth quarter. This weakness could persist into the current quarter as uncertainty in the United States remains elevated and businesses cautious.”

In the U.S., November factory orders and weekly retail sales numbers were released today. Weekly retail sales rose only 0.2% in the week ended January 5 compared to a year earlier and sales for the five weeks ended January 4 rose only 0.5% from the same period in November. “The survey, compiled from a sample of 9,000 general merchandise chain stores suggests a lacklustre shopping season and provides further evidence that the U.S. economy grew by less than 2% in the fourth quarter,” RBC says.

Also, U.S. factory orders in November fell 0.8%, slightly worse than expectations after a 1.4% gain in October. “The decline was broad-based, although business computer spending edged up. Going forward the news will get better, with the December ISM new orders index posted its largest jump in 22 years to 63.3, well into expansion territory. Worryingly, capital goods orders fell 2.6%, partially reversing October’s 5.5% gain. Business Investment spending remains hesitant,” RBC concludes.