In November 2025, Canada’s manufacturing sector shrank again, according to data from S&P Global.
Trade Uncertainty Drags Output and New Orders
Analysts say rising trade tensions, especially uncertainty around tariffs and stalled negotiations with the United States, dampened demand and investor confidence. As a result, the output index fell to 48.0 and new orders dropped to 47.4.
Manufacturers responded by relying on existing capacity and delaying new purchases. They cut back on hiring as well — the employment index dipped to 48.5.
Price Pressure Eases, But Weak Demand Remains
On the bright side, input and output prices eased in November. The input-price index dropped, and selling price growth slowed — signs that inflation pressures may be cooling under weak demand.
However, falling prices likely reflect lower demand rather than a healthy supply environment.
Broader Impact on the Economy
Manufacturers across many provinces said they may delay investment or expansion plans until trade certainty returns. The slump may also ripple into related sectors such as logistics, metals and construction supply chains.
Consumers, in turn, could face reduced product availability or delays as companies cut back on output and postpone orders.
What’s Next for Manufacturing in Canada
For a rebound to occur, trade tensions must ease and demand must return. Experts say Ottawa and trading partners need clarity on tariffs — especially ahead of the 2026 review of the United States–Mexico–Canada Agreement (USMCA), which many see as key for export-driven industries.
Until then, firms may continue to operate at reduced capacity, prioritizing cost control over growth.
