FX.co ★ Canada Factory Activity Contracts Les than Expected

The S&P Global Canada Manufacturing PMI improved to 49.6 in October, up from 47.7 in September. This increase indicates only a slight deterioration, marking the slowest rate of contraction since the beginning of the year in January. Both output and new orders declined at a significantly reduced rate, with production nearly stable and new orders decreasing at their slowest rate in 2023. Tariff issues and unpredictable trade policies continued to pose significant challenges, negatively impacting export sales, causing delays in customs, and keeping input costs high. Employment showed a slight decline as companies opted not to replace departing employees, but job losses moderated significantly compared to earlier in the year. Despite ongoing tariff-related pressures, input cost inflation remained pronounced, and firms found themselves in a better position to increase selling prices compared to September, as inflation in output prices rose from an 11-month low. Looking forward, business confidence improved to its highest point since January, although it still remained below the typical level, hindered by the uncertain trade policy environment.