This is the best read from February 2023.
- Production and new orders show strong growth
- Some US clients rally ahead of Trump tariffs expected in 2025
- Port and postal strikes cause supply chain disruptions
- The cost of input inflation is the highest since April 2023
Canada's manufacturing sector ended 2024 on a positive note, with the PMI hitting its best level in nearly two years.
Employment continued to grow for the fourth consecutive month, albeit at a slower pace. Input costs accelerated to an 8-month high, partly due to CAD weakness.
Looking ahead, manufacturers are more optimistic, with confidence reaching an 18-month high. However, uncertainty regarding the scope and timing of potential US tariffs weighs on the long-term outlook.
Commenting on the latest survey results, Paul Smith, Director of Economics at S&P Global Market Intelligence, said:
“Canada's manufacturing sector had a very positive end to 2024, with overall growth rising to the best level in nearly two years. Panelists reported a general increase in demand and cited growth in sales to US consumers as President Trump is expected to impose tariffs on Canadian goods in 2025 (although total exports in the December almost unchanged).
“Panelists expect a near-term increase in sales ahead of the potential tariff changes, which helped bolster production expectations.” However, the shape and level of these tariffs are still unknown and caused great uncertainty among companies when assessing the outlook.
“Finally, bottlenecks in domestic supply chains remained common in December, with various port and postal strikes leading to significant challenges to production inputs and shipping out of manufacturers' warehouses . This resulted in a significant extension of vendor delivery times and a record increase in finished goods inventories in December.”
There is some cause for optimism here but it's hard to say how much of a rally. It certainly contradicts the narrative of Canada's weakening economy.
