Key facts
- The S&P Global Canada Manufacturing PMI fell to 49.6 in October from 51.5 in September, the first reading below 50 since December.
- The output index fell to 48.4 from 50.8 in September, and the new orders measure dropped to 46.5 from 49.3.
- New orders hit their lowest reading since September 2025, according to the survey.
- Average lead times for delivery of inputs lengthened to the greatest degree since August 2022.
- Input cost and output price measures rose to 71.7 and 62.3, their highest levels in more than four years.
- Paul Smith of S&P Global Market Intelligence said firms reported concurrent drops in output and new orders.
Canada's manufacturing sector contracted in October for the first time in 2026, as tariffs and geopolitical uncertainty weighed on activity, Reuters reported on November 2. The S&P Global Canada Manufacturing Purchasing Managers' Index fell to 49.6 last month from 51.5 in September, the first move below the 50 threshold since December. A reading below 50 indicates contraction.
"Having enjoyed an uninterrupted run of solid growth throughout 2026 so far, Canada's manufacturing sector ran out of steam in October," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. "Against a backdrop of tariffs and ongoing supply-side disruption, firms reported concurrent drops in both output and new orders over the month."
The output index fell to 48.4 from 50.8 in September, while the new orders measure was at 46.5, down from 49.3 and the lowest reading since September 2025. Average lead times for the delivery of inputs lengthened to the greatest degree since August 2022 as tariffs and global conflicts contributed to product shortages and supply-chain disruption during the month.
"To add to the broad deterioration in operating conditions, there was also an intensification of price pressures," Smith said. Measures of input costs and output prices rose to the highest levels in more than four years, hitting 71.7 and 62.3 respectively.
A trade rift between the United States and Canada widened in August as the US imposed 50% tariffs on a wide range of imports from Canada and Canada responded with retaliatory tariffs. Last Wednesday, the Bank of Canada raised its benchmark interest rate by 25 basis points to 2.50% and said further increases might be needed to prevent soaring energy costs from fueling broader inflation.