By Fergal Smith
TORONTO, Nov 2 (Reuters) – Canada’s manufacturing sector contracted in October for the first time this year as tariffs and geopolitical uncertainty weighed on activity, and after inflation pressures intensified.
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 last month from 51.5 in September, marking the first move below the 50 threshold since December. A reading below 50 indicates contraction in the sector.
• “Having enjoyed an uninterrupted run of solid growth throughout 2026 so far, Canada’s manufacturing sector ran out of steam in October,” Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. “Against a backdrop of tariffs and ongoing supply-side disruption, firms reported concurrent drops in both output and new orders over the month.”
• A trade rift between the United States and Canada widened in August as the US imposed 50% tariffs on a wide range of imports from Canada and Canada responded with retaliatory tariffs.
• The output index fell to 48.4 from 50.8 in September, while the new orders measure was at 46.5, down from 49.3 and the lowest reading since September 2025.
• Average lead times for the delivery of inputs lengthened to the greatest degree since August 2022 as tariffs and global conflicts contributed to product shortages and supply-chain disruption during the month.
• “To add to the broad deterioration in operating conditions, there was also an intensification of price pressures,” Smith said.
• Measures of input costs and output prices rose to the highest levels in more than four years, hitting 71.7 and 62.3 respectively.
• Last Wednesday, the Bank of Canada raised its benchmark interest rate by 25 basis points to 2.50% and said further increases might be needed to prevent soaring energy costs from fueling broader inflation.
(Reporting by Fergal Smith; Editing by Chizu Nomiyama )
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