Growth in Canada’s manufacturing sector slowed in September, with weaker U.S. demand, supply-chain disruptions and rising input costs weighing on factories, according to S&P Global.
The S&P Global Canada Manufacturing PMI fell to 51.5 in September from 53.0 in August, its lowest reading in six months. The index remained above the 50 threshold separating expansion from contraction, indicating that manufacturing activity continued to grow, but at a slower pace.
U.S. Demand Weighs on Export Orders
Production increased again during September, although manufacturers reported more moderate growth as some customers became hesitant about placing orders.
New export orders declined for a fourth consecutive month, with companies reporting weaker demand from U.S. customers amid increased trade frictions.
Manufacturers also cited customs delays and difficulties at the U.S. border among the factors affecting operations.
Supply-Chain Delays Intensify
Supply conditions deteriorated during the month, with delivery delays becoming the most widespread since August 2022.
Companies reported shortages of available stock from suppliers, forcing manufacturers to rely more heavily on existing inventories. As a result, stocks of purchases declined for the first time in six months.
The conflict with Iran and demand associated with artificial intelligence were also cited by surveyed companies as contributing to pressure on already stretched supply chains.
Input-Cost Inflation Hits Highest Since 2022
Manufacturers faced another challenge from rising production costs.
Product shortages and elevated energy prices pushed input-cost inflation to its highest level since mid-2022, increasing cost pressures across the sector.
Business confidence also weakened, falling to its lowest level since December 2025 as companies assessed the combination of trade uncertainty, supply constraints, higher costs and softer demand.
September’s PMI indicates that Canadian manufacturing remained in expansion territory, but the decline from August shows that momentum weakened as external demand and supply conditions became more challenging.
