Canada’s manufacturing sector lost what little momentum it had in March, with the headline S&P Global Canada Manufacturing Purchasing Managers’ Index falling to 50.0 from 51.0 in February, its lowest reading in three months.
Output slipped into contraction, with the output index falling to 49.6 from 50.0 in February, while new orders weakened more sharply, dropping to 48.7 from 50.6.
Paul Smith, economics director at S&P Global Market Intelligence, said Canada’s manufacturing sector “again experienced subdued performance during March” and noted that production declined marginally and new orders fell modestly, in part because of tariffs tied to trade with the neighboring US.
That tariff pressure matters because the sectors targeted are not peripheral. US tariffs on autos, steel, and aluminum have badly hampered Canadian exports, hitting industries that are deeply tied into cross-border supply chains.
Smith also said the Middle East conflict had a relatively muted impact on Canadian manufacturing compared with regions such as Europe in March, but still raised uncertainty around the outlook.
The future output index fell to 55.4 in March from 57.5 in February, also marking a three-month low. The index remained above 50, meaning firms still expected growth over the next 12 months, but the drop showed confidence deteriorating further and staying well below its long-run average.
On costs, the input price index edged up to 59.2 from 59.1 in February, reaching its highest level since August.
Fuel was a key part of that pressure. Canada is a major oil producer, and oil prices have jumped since the start of the US-Israel war on Iran on February 28.
The inflation angle also didn’t help as the Bank of Canada warned it stands ready to raise borrowing costs if higher energy prices risk becoming persistent inflation.
Information for this briefing was found via The Globe And Mail and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
