Canada's manufacturing PMI falls to 49.6 in October, first contraction of the year

Canada's manufacturing purchasing managers' index (PMI) fell to 49.6 in October from 51.5 in September, S&P Global reported on November 2, marking a third consecutive monthly decline and the first reading below the 50 threshold between expansion and contraction so far this year. (Photo: file image of factory work, not a surveyed plant.)

Output and new orders weaken together

Output fell for the first time since March, while new work contracted by the most in more than a year, as companies reported uncertainty among clients caused by the impact of tariffs on demand. Paul Smith, economics director at S&P Global Market Intelligence, said the sector ran out of steam in October after an uninterrupted run of solid growth through most of 2026, with overall operating conditions deteriorating marginally.

Tariff uncertainty and a cooling economy

The United States imposed 50% tariffs in August on roughly 5% of Canadian exported goods, then moved in September to ban imports of many Canadian dairy products, alcoholic beverages and motorcycles, while Canada retaliated with duties on about $20 billion worth of U.S. goods. An early estimate showed gross domestic product contracted 0.1% in September from the month before, putting the economy on track for annualized growth of about 1.3% in the third quarter, below the roughly 2% pace forecast by the Bank of Canada.

Source: S&P Global Canada Manufacturing PMI, via Dow Jones / Morningstar, November 2, 2026.