Canada’s manufacturing economy registered a notable upturn
in performance during April, with output and new orders rising
at rates not seen since the first half of 2022. Employment and
purchasing were also raised, whilst firms signalled hopes that
growth will be sustained in the year ahead.
However, anecdotal evidence suggested that April’s growth
was often driven by stock building. According to panellists,
the war in the Middle East led to considerable concerns
regarding product availability, supply-chain robustness and
the likelihood of higher prices in the months ahead. Moreover,
April’s survey highlighted the immediate impact of the war:
higher fuel and freight prices pushed up overall operating
costs to a degree not seen in over three-and-a-half years
whilst vendor delivery times lengthened at the greatest rate
since March 2025.
The seasonally adjusted S&P Global Canada Manufacturing
Purchasing Managers’ IndexTM (PMI®) – a composite index
designed to provide a summary of operating conditions in the
manufacturing economy – improved to 53.3 in April, up from
50.0 in March. It was the third time in the past four months
that the PMI has posted above the critical 50.0 no-change
mark, and the latest reading was the highest since June 2022.
The improvement in the PMI was driven by concurrent
increases in production and new orders. Growth in production
was the steepest since May 2022, whilst the rise in new work
was marked and the greatest in over four years. Latest data
showed that new export orders rose solidly and at the fastest
rate since the start of 2022.
That said, anecdotal evidence suggested that growth was
largely driven by client stockpiling due to worries over
product availability arising from the war in the Middle East
and associated adverse impacts on supply chains and prices.
Supply chain challenges were reflected by the latest data on
vendor delivery times, which deteriorated in April for a twentysecond successive month and at the greatest degree for just
over a year. Delays were especially apparent on maritime
routes, and vendors were noted to be struggling to deal with an upturn in demand as firms sought to secure stock given
concerns over future product availability.
Similar factors underpinned growth in purchasing activity
amongst manufacturers themselves. Overall, input buying
rose at the steepest rate since June 2022 and led to a
marginal rise in input stocks. Panellists stressed that
stock building was in part linked to expected reductions in
availability and the likelihood of rising prices in the coming
months.
April data highlighted that price pressures have already
intensified. Input prices overall rose to the greatest
degree in over three-and-a-half years, with fuel and freight
transportation costs driven substantially higher by the war
in the Middle East. Tariffs were again also reported as a cost
inflationary factor. Manufacturers responded by raising their
own charges wherever possible with latest data showing the
greatest increase in selling prices since late 2022.
The upturn in new orders led some firms to expand their
productive capacity in April. Staffing levels overall rose for
the third time in the past four months, albeit marginally as
some manufacturers chose not to replace leavers. This in
part reflected some uncertainty in the outlook, with firms
expressing notable worries that rising prices, costs and tariffs
will negatively impact production in the coming months. That
said, goods producers are more confident about the growth
outlook than in March and still expect to see an upturn in
demand over the next year. Optimism subsequently improved
to a 16-month high in April.
“Ordinarily, a PMI reading of 53.3 would be
celebrated, especially in the context of the sector’s
underperformance since the pandemic. But lifting the
lid on the latest headline PMI, whilst also drawing on the
qualitative evidence of our respondents, suggests the
April number should be treated with some considerable
caution.
“Yes, output and (especially) new orders surged since
March, but growth appears to be driven by worry rather
than any meaningful or permanent uplift in demand:
anecdotal evidence pointed towards client stock building
amid escalating worries about future product availability
and price rises. That’s squarely due to the war in the
Middle East and the associated energy price and supply
shock, the effects of which are now cascading across
global markets and leading to a scramble to secure stock
and lock in prices with suppliers.
“This is further highlighted by lengthening delivery times
and input costs increasing at a rate unseen since the
post-pandemic related price surges of 2022. The degree
of pass through to clients was also notable, with output
price inflation picking up to its strongest since late 2022.
Such developments will certainly be noted by central
bank policymakers as they look to timely survey data to
assess the degree to which inflation expectations are
being raised.”
S&P Global Canada Manufacturing PMI®
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