Canada manufacturing activity contracts for 11th straight month

Canadian manufacturing activity remained in contraction territory in December as output and new orders declined amid ongoing market uncertainty, particularly around U.S. tariffs, according to S&P Global.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) edged up to 48.6 in December from 48.4 in November, marking the 11^th consecutive month below the 50-point threshold that separates expansion from contraction. While still negative, December’s reading represented the second-slowest pace of contraction over that period.

S&P Global said factory output continued to fall alongside a renewed drop in new orders, as firms reported cautious customer demand. Lower capacity requirements led manufacturers to reduce staffing levels again, largely by not replacing departing employees.

Input cost pressures rose slightly during the month, prompting companies to raise their output prices at the fastest pace in six months. Meanwhile, confidence in future production weakened, slipping to a three-month low.

Looking ahead, Trading Economics forecasts the Canadian manufacturing PMI will rise to 50.8 by the end of the current quarter and trend toward 52 by 2027.

A PMI reading below 50 indicates month-over-month contraction in the manufacturing sector.