Canada Factory Activity Expands After 11-Month Rout

The S&P Global Canada Manufacturing PMI rose to 50.4 in January 2026 from 48.6 in the previous month, marking the end of an eleven-month downturn and recording a 12-month high. Output stabilised in the period even as new order inflows fell only marginally, the weakest reduction in 12 months, with panellists citing persistent market uncertainty and tariffs from the United States weighing on trade. Consequently, lower capacity demand gave way to a marginal net gain in staffing levels for the first time in a year, with some firms taking on staff in expectation of higher output. Meanwhile, input price inflation accelerated to a five-month high and drove firms to raise their output charges to the greatest degree since March 2025. Looking forward, confidence in future output improved to a three-month high.

The S&P Global Canada Manufacturing PMI inched higher to 48.6 in December of 2025 from 48.4 in the previous month, marking the eleventh consecutive month of contraction in factory activity, albeit at the second slowest pace in the period. Output continued to decline in the period amid a fresh drop in new order intakes, with panellists citing persistent market uncertainty, especially in relation to tariffs from the United States. Consequently, the lower capacity demand in plants drove companies to another cut in employment levels, largely due to the non-replacement of leavers. Meanwhile, input price inflation rose slightly and drove firms to increase their output charges the most in six months. Looking forward, confidence in future output softened to a three-month low.

The S&P Global Canada Manufacturing PMI fell to 48.4 in November from October’s 49.6, signalling a modest deterioration and extending the sector’s contraction for a tenth straight month. Output and new orders both declined at quicker rates, with production and new work contracting as market uncertainty and subdued demand weighed on activity and new export orders falling for a tenth successive month. Tariffs and volatile trade policies remained a key constraint, hitting export sales and contributing to subdued purchasing. Employment registered a modest fall as firms typically chose not to replace leavers, with workforce numbers down for the tenth successive month. Input cost inflation eased to its weakest level in over a year, and selling charge inflation similarly softened. Looking ahead, confidence remained positive but historically subdued as unpredictable trade policy continued to cloud the outlook.