Canada PMI Signals Solid Factory Expansion

The S&P Global Canada Manufacturing PMI edged up to 53.5 in July 2026 from 53 in June, the highest since June 2022, defying expectations of a decline to 50.2. The reading signaled a fourth straight month of expansion, supported by stronger output and new orders amid improved domestic demand, although export orders fell for a second consecutive month due to tariffs and the conflict in the Middle East. Input cost inflation accelerated to a four-year high as supply shortages and delivery delays intensified. Higher demand added further strain to supply chains and upward pressures on prices, prompting manufacturers to raise selling prices amid higher purchasing activity. Firms also increased hiring to meet stronger demand, while inventories of finished goods rose partly reflecting shipping delays. Despite continued growth in sales and production, business confidence eased to a four-month low as firms remained concerned about rising costs and geopolitical uncertainty.

The S&P Global Canada Manufacturing PMI held at 53.0 in June 2026, little changed from 52.9 in May, pointing to a third straight month of solid expansion in factory activity. Output and new orders rose for a third consecutive month, supported by new product launches, although firms noted that tariffs continued to weigh on demand and export orders fell for the first time in three months. Backlogs increased, prompting manufacturers to expand payrolls at the fastest pace since October 2024. Purchasing activity also rose as firms sought to secure inventories and avoid further supplier price hikes. Supply chain delays worsened to the highest level since September 2022, largely linked to shipping disruptions from the Iran conflict. Input cost inflation accelerated to its highest since July 2022, driven by oil, transport costs and tariffs. Business confidence remained positive but fell to a three-month low amid uncertainty over US trade policy.

The S&P Global Canada Manufacturing PMI remained in growth territory for a second straight month at 52.9 in May 2026, down slightly from 53.3 in April but still above its long-run average. The sector was supported by further increases in output and new orders, as firms reported stronger demand and success in attracting new customers. Employment also continued to rise, with some manufacturers citing pressure on existing capacity. However, inflationary pressures intensified, with both input and output price measures climbing to near four-year highs. At the same time, supplier delivery times deteriorated sharply as the conflict in the Middle East disrupted supply chains. Despite ongoing growth, business confidence remained subdued amid concerns about costs and the broader economic outlook.