Canadian manufacturing activity reached its lowest point of the year in July, with both production and new orders declining at faster rates.

The Purchasing Managers’ Index for S&P Global Canada Manufacturing dropped to 47.8, marking the lowest reading since December.

The operating environment became unclear due to rising prices, geopolitical concerns, and shipping issues.

Employment increased slightly, but the future output index fell to 56.7, a more than four-year low.

The Bank of Canada’s recent second cut in interest rates could not have come soon enough as firms look to lower borrowing costs and reduce inflation to reinvigorate demand.