Canada Manufacturing Contracts for First Time This Year
The S&P Global Canada Manufacturing PMI fell to 49.6 in October as U.S. tariffs and supply disruptions weighed on output and orders.
Updated on Nov. 3, 2026 in Manufacturing
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Canada's manufacturing sector contracted in October 2026, with the S&P Global Canada Manufacturing PMI dropping to 49.6 from 51.5 in September. The reading is the lowest since December 2025, as output and new orders declined.
Why it matters
Tariffs and broader geopolitical uncertainty have reduced domestic and international demand for Canadian-made goods. Manufacturers are also facing rising input costs, which could sustain pressure on the sector.
The PMI fell to 49.6 in October from 51.5 in September, the lowest reading since December 2025. New export orders declined for a fifth successive month, and the sector recorded its first net reduction in employment since March.
The players
S&P Global
S&P Global is a major financial information and analytics company whose PMI surveys are widely followed as indicators of manufacturing activity.
The details
Manufacturing output and new orders both declined in October, with new orders falling to the greatest degree in over a year. Average lead times for input deliveries lengthened to the greatest degree since August 2022, as tariffs and global conflicts contributed to shortages and supply-chain disruption.
Timeline
August 2026: The U.S. imposed 50 per cent tariffs on a wide range of Canadian imports, and Canada responded with retaliatory tariffs.
September 2026: The PMI stood at 51.5 before declining.
October 2026: The PMI fell to 49.6, signalling contraction in the sector.
November 2, 2026: An S&P Global economics director issued a statement on the October results.
Market Landscape
The contraction follows the U.S. imposition of 50 per cent tariffs on a wide range of Canadian imports in August 2026, which Canada answered with retaliatory tariffs. The resulting trade friction has weighed on export demand, with new export orders falling for five consecutive months.
Higher input and output prices from tariffs, steel costs, and freight may be passed along to Canadian consumers in the goods they buy. Manufacturing job reductions in October also affect workers in the sector.
The takeaway
Manufacturers facing tariffs and rising input costs are likely to keep watching export orders closely, as firms remain only cautiously hopeful that production will pick up.
Further reading
For more on how trade policy is reshaping production, explore our Manufacturing coverage.
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