Canada December S&P Global PMI 52.2 vs 52.0 prior

Prior was 52.0

This is the best reading since February 2023.

• Output and new orders show solid growth
• Some US clients stockpiling ahead of expected Trump tariffs in 2025
• Port and postal strikes causing supply chain disruptions
• Input cost inflation highest since April 2023

The Canadian manufacturing sector ended 2024 on a positive note, with the PMI hitting its best level in nearly two years.

Employment continued growing for a fourth straight month, though the pace slowed. Input costs accelerated to an 8-month high, partly due to CAD weakness.

Looking ahead, manufacturers are more optimistic, with confidence hitting an 18-month high. However, uncertainty around the scope and timing of potential US tariffs is weighing on the longer-term outlook.

Commenting on the latest survey results, Paul Smith,
Economics Director at S&P Global Market Intelligence
said:

“Canada’s manufacturing sector enjoyed a relatively
positive end to 2024, with overall growth ticking up to
its best level in nearly two years. Panellists reported a
general uplift in demand and hinted at some sales growth
to US clients given the expectation that President elect
Trump will impose tariffs on Canadian goods in 2025
(although overall exports in December were broadly
unchanged).

“Panellists are forecasting a near-term boost to sales
ahead of these possible tariff changes, which helped
bolster production expectations. However, the shape
and extent of these tariffs remains unknown and led to
considerable uncertainty amongst firms when assessing
the outlook.

“Finally, bottlenecks in domestic supply chains
remained prevalent in December, with various port and
postal strikes leading to considerable challenges for
inbound production inputs and outbound shipping from
manufacturers’ warehouses. The result was a noticeable
lengthening of vendor delivery times and a record
increase in inventories of finished goods in December.”

There is some reason for optimism here but it’s tough to say how much is stockpiling. It certainly runs against the narrative of a weakening Canadian economy.

This article was written by Adam Button at www.forexlive.com.