Canadian factory PMI shows sector contracting for first time in 2026
SPY•Canada's manufacturing PMI fell to 49.6 in October from 51.5 in September, its first reading below 50 since December. Output and new orders declined as input costs and output prices rose to their highest levels in more than four years.
1. Manufacturing activity contracts
Canada's manufacturing sector contracted in October for the first time this year, with tariffs and geopolitical uncertainty weighing on activity. The S&P Global Canada Manufacturing PMI fell to 49.6 from 51.5 in September; readings below 50 indicate contraction.
2. Orders and costs worsen
The output index dropped to 48.4 from 50.8, while new orders fell to 46.5 from 49.3, their lowest reading since September 2025. Input delivery lead times lengthened by the most since August 2022 as tariffs and global conflicts contributed to shortages and supply-chain disruption. Input costs rose to 71.7 and output prices to 62.3, their highest levels in more than four years.
3. Tariffs and rates
S&P Global Market Intelligence economics director Paul Smith said firms reported declines in output and new orders against a backdrop of tariffs and supply-side disruption, alongside intensifying price pressures. The United States imposed 50% tariffs on a wide range of Canadian imports in August, and Canada responded with retaliatory tariffs. The Bank of Canada raised its benchmark rate by 25 basis points to 2.50% last Wednesday and said further increases might be needed to prevent energy costs from fueling broader inflation.
