Canada’s Manufacturing Sector Expansion Extends to Third Month -PMI
Canada’s manufacturing sector continued to grow in June, marking a third consecutive month of expansion, driven by increased production and new orders, S&P Global said in its monthly purchasing manager index (PMI) report.
According to the report, employment in Canada’s manufacturing sector surged to its highest level since October 2024, as companies increased purchasing activities to mitigate supply chain disruptions, which remained significant in June.
Cost pressures intensified due to the ongoing conflict in Iran, leading to higher prices for oil, transportation, and supplies.
The seasonally adjusted S&P Global Canada Manufacturing PMI posted 53.0 in June, only slightly up from May’s 52.9. This marks three months above the crucial 50.0 level, indicating a solid pace of growth that remains stronger than the trend.
June also saw notable rises in both output and new orders for the third month in a row. Sales were supported by the launch of new products, although some companies reported weakened demand, with tariffs impacting their order books.
Consequently, the increase in total new work was the slowest since March, and new export orders fell for the first time in three months.
Despite these challenges, Canada’s manufacturing capacity experienced pressure, leading to growing backlogs of work. Firms responded by increasing their staffing levels for the third month consecutively, mainly to manage higher workloads.
While employment growth was modest, it was the highest since October 2024, facilitating a rise in production and leading to a first increase in finished goods inventories since February 2025.
Companies also ramped up their purchasing efforts, partly due to higher production and new order requirements, as well as the need to secure stock and prevent further price hikes from suppliers. Supply-side delays persisted in June, with delivery times deteriorating to their worst since September 2022.
These delays have been linked to the ramifications of the Iran war, causing interruptions in shipping routes. Increasing demand compounded existing stock shortages at vendors, resulting in a rapid rise in input prices, with inflation rates reaching the highest since July 2022.
High oil prices and transportation costs contributed to this inflationary pressure, while tariffs were highlighted as a key driver of rising prices. Companies sought to protect their margins by raising their own prices.
While selling price inflation remained high, it softened to a three-month low. Looking forward, companies expressed some degree of confidence in continued production growth over the coming year. This optimism was associated with plans for new product releases.
Nonetheless, concerns regarding U.S. tariff policies weighed on overall confidence, which decreased to a three-month low and fell below trend.
Paul Smith, Economics Director at S&P Global Market Intelligence, noted, “Canada’s manufacturing economy showed positive signs in June, with increased output and new orders supporting employment growth for the third month in a row.
“ However, underlying trends reveal ongoing challenges, with growth driven partly by stockpiling as firms face substantial supply-side disruptions.
“Average lead times for deliveries extended to their longest since September 2022, mainly due to the impacts of the Iran war on global shipping routes. This situation has contributed to significant price pressures, with cost inflation reaching its highest level in nearly four years, while demand shows signs of fragility.” FTSE Russell Suspends Nigeria’s Frontier Market Upgrade
