The S&P Global Canada Manufacturing PMI edged up to 53.5 in July 2026 from 53 in June, the highest since June 2022, defying expectations of a decline to 50.2. The reading signaled a fourth straight month of expansion, supported by stronger output and new orders amid improved domestic demand, although export orders fell for a second consecutive month due to tariffs and the conflict in the Middle East. Input cost inflation accelerated to a four-year high as supply shortages and delivery delays intensified. Higher demand added further strain to supply chains and upward pressures on prices, prompting manufacturers to raise selling prices amid higher purchasing activity. Firms also increased hiring to meet stronger demand, while inventories of finished goods rose partly reflecting shipping delays. Despite continued growth in sales and production, business confidence eased to a four-month low as firms remained concerned about rising costs and geopolitical uncertainty.

Canada’s manufacturing sector expanded in July at the fastest pace in more than four years as rising ​domestic activity boosted production and new orders, but weak ‌international demand raised doubt over the sustainability of the increase.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) (opens pdf) edged up to 53.5 last month from 53.0 ​in June. It marked the seventh straight month that the ​index was at or above the 50 threshold and ⁠the highest reading since June 2022.

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“PMI data for July painted a positive picture ​of current growth, with output and new orders both rising at faster rates on the back of firmer domestic demand," Paul Smith, economics director at S&P ​Global Market Intelligence, said in a statement.

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“Companies were suitably encouraged ​to take on additional workers, raising their staffing levels to bolster capacity and ‌help ⁠support current workloads.”

“Whether growth can be sustained at its current clip is doubtful. ​International demand remains ​weak, driven lower ⁠by tariffs and a highly uncertain geopolitical environment,” Smith said.

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Immediate production needs encouraged some manufacturers to take on additional staff. That led to a net increase in employment for a fourth successive month.

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