The S&P Global Canada Manufacturing PMI registered 51.0 in February, its highest reading in 13 months.
Canada’s manufacturing sector improved for the second consecutive month in February, driven by a renewed upturn in new orders and continued employment growth, according to S&P Global.
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) registered 51.0 in February, up from 50.4 in January and the highest reading since January 2025. The index has now held above the 50.0 threshold that separates growth from contraction for two straight months.
New orders were a notable bright spot, growing for the first time in 13 months. The upturn was driven by improving domestic demand, which helped offset a continued decline in export sales. Export orders fell again in February, though at the slowest pace since October 2025. Survey respondents widely cited US tariffs as an ongoing headwind to foreign sales.
Output was unchanged in February, continuing the stable trend seen so far in 2026. Some firms reported a boost from rising workloads, while others cited caution around production requirements and tight inventory strategies. Stocks of finished goods declined for the 12th consecutive month, though only marginally.
Employment rose at the fastest pace in 13 months, with the rate of job creation edging up from January. Input buying also expanded slightly, the first increase in purchasing activity since December 2024.
Cost pressures intensified in February. Purchasing costs rose sharply, with firms citing higher prices for aluminum and steel. The overall pace of cost inflation was the fastest in six months, driven in part by the passing on of reciprocal tariffs. Factory gate prices increased at the steepest rate since March 2025.
Supply chain conditions also deteriorated, with transportation delays contributing to the sharpest decline in supplier performance since May 2025.
“February data indicated a positive month for the Canadian manufacturing sector as new orders returned to growth despite a backdrop of softening export sales and ongoing challenges arising from US tariffs,” said Tim Moore, Economics Director at S&P Global Market Intelligence. “Production volumes have stabilized so far in 2026, following a sustained downturn last year. Greater workloads and signs of a turnaround in domestic demand also contributed to the fastest rise in employment for 13 months and a marginal rebound in purchasing activity
Despite these pressures, Canadian manufacturers were optimistic about the year ahead. Around 24 per cent of survey respondents expected output growth over the next 12 months, compared to just nine per cent forecasting a reduction — the highest level of overall optimism since December 2024. However, confidence remained below the long-run survey average, with widespread concern about US tariffs and continued trade uncertainty.