S&P Global Economist Says Canada's Manufacturing Sector Posts Resilience, But Inflation, Trade Uncertainties Look to Be 2026 Top Themes

10:50 AM EST, 02/02/2026 (MT Newswires) -- Following a challenging 2025, PMI data suggested that Canada's manufacturing sector started the new year on a more positive footing, said Paul Smith, economics director at S&P Global Market Intelligence, on Monday.

The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI), a composite index designed to provide an overview of the health of the manufacturing sector, edged above the critical 50.0 no-change mark in January for the first time in a year to signal an improvement in overall operating conditions. After accounting for seasonal factors, the index recorded 50.4, up from 48.6 and a 12-month high, noted S&P Global earlier Monday.

Output stabilized, after nearly a full year of continuous contraction, whilst confidence in the outlook improved and marginal jobs growth was recorded for the first time in 12 months.

However, reflecting the underlying fragility of the upturn, new orders fell again as tariffs continued to disrupt trade, especially with the neighbouring United States, pointed out Smith.

In addition, operating margins remained under some pressure following a further acceleration of input price inflation, although firms were able to raise their own changes to the greatest degree since last March.

The latest survey data overall points to an underlying resilience in the manufacturing economy, with some positive output growth recorded and a marginal recovery in the labor market following a prolonged downturn, stated the economist.

However, ongoing inflation and trade uncertainties seem set to remain dominant themes in 2026 and as such the primary challenges to navigate for many manufacturers in the coming year, added Smith.

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