Prior month 51.5
Details:
Manufacturing PMI: 49.6. Prior 51.5. First reading below 50 in 2026 and lowest since December 2025.
Production: First decline since March.
New orders: Steepest contraction in over a year.
Export orders: Fifth consecutive monthly decline, with the sharpest fall since January.
Supplier delivery times: Greatest deterioration since August 2022.
Input costs: Fastest increase since June 2022.
Selling prices: Strongest inflation in over four years.
Employment: First net decline since March.
Canada’s manufacturing sector slipped back into contraction in October, according to S&P Global. The Manufacturing Purchasing Managers’ Index fell to 49.6 from 51.5 in September, with tariffs and geopolitical uncertainty weighing on domestic and international demand.
The weakness was evident in both production and new orders. Manufacturers highlighted disruption to trade with the United States, while delivery delays also constrained output. Backlogs declined solidly for a second consecutive month, and firms reduced employment as departing workers were not replaced.
The inflation picture moved in the opposite direction. Tariffs, higher steel and fuel prices, and rising freight costs pushed input cost inflation to its strongest since June 2022. Manufacturers responded with the largest increases in selling prices in more than four years. Confidence in the outlook remained historically subdued.
Paul Smith, Economics Director at S&P Global Market
Intelligence:
“Having enjoyed an uninterrupted run of solid growth
throughout 2026 so far, Canada’s manufacturing sector
ran out of steam in October, recording a marginal
deterioration in operating conditions overall. Against a
backdrop of tariffs and ongoing supply-side disruption,
firms reported concurrent drops in both output and new
orders over the month.
To add to the broad deterioration in operating
conditions, there was also an intensification of price
pressures as input costs and output charges both
rose at rates not seen for over four years, with inflation
underpinned by tariffs, trade disruptions from the
Middle East and AI related demand pushing up product
prices.
Given that these price and supply drivers are unlikely to
be resolved soon, underwhelming demand and elevated
price pressures are set to continue for the foreseeable
future. No wonder firms therefore remain subdued in
their assessment of the outlook, with confidence again
remaining well below trend in October.”
Quick analysis: This is an uncomfortable mix for the Bank of Canada. Falling orders, declining production and job losses point to weaker activity, but rising costs and selling prices complicate the case for lower rates. The deterioration in demand would normally weigh on the Canadian dollar and put upward pressure on USDCAD. However, persistent inflation could limit expectations for policy easing. The key question is whether manufacturers can continue passing higher costs to customers as demand softens.
What this report measures: The S&P Global Canada Manufacturing Purchasing Managers’ Index is a monthly, seasonally adjusted survey covering orders, output, employment, supplier delivery times and purchased inventories. Readings above 50 signal improving operating conditions, while readings below 50 indicate deterioration. Traders follow its demand and pricing signals for clues about growth, inflation and interest rates.
This article was written by Greg Michalowski at investinglive.com.
