Canadian factory PMI rises to four-year high on firmer domestic demand

By Fergal Smith.

August 4, 2026 (Reuters) - 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) 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.

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.

Canadian factory PMI rises to four-year high on firmer domestic demand

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