FX.co ★ Canada Factory Activity Contracts for 4th Month

The S&P Global Canada Manufacturing PMI edged up to 46.1 in May 2025 from 45.3 the prior month, yet it continues to signal a fourth consecutive decline in factory activity. This downturn is driven by significant contractions in both production and new orders. Many respondents attributed the weak market demand to tariffs and the erratic nature of U.S. trade policy, which led to noticeable reductions in production and new work, and a sharper drop in new export orders compared to overall sales. As workloads diminished, manufacturers reduced staffing for the fourth consecutive month and experienced a marked decrease in backlogs. This situation brought about reductions in purchasing activities and inventory levels. In terms of pricing, input cost inflation quickened further, prompting companies to increase output prices despite the inflation rate dipping to a three-month low. Although overall confidence remained low, it was tempered by trade-related concerns, even as some optimism about better market conditions persisted.