Canadian manufacturing activity recorded its sharpest decline since the height of the COVID-19 pandemic in April, heavily impacted by uncertainty stemming from U.S. trade policies and tariffs. The downturn led to job losses across the sector.
The S&P Global Canada Manufacturing Purchasing Managers’ Index, or PMI, dropped for the third straight month, falling to 45.3 points in April. This marks the lowest reading since May 2020.
The index measures output and new orders, both of which deteriorated significantly. Many manufacturers responded by laying off employees as a direct result of the trade tensions.
"The uncertainty regarding the future direction and implementation of tariffs was again especially damaging," said Paul Smith, economics director at S&P Global Market Intelligence. He noted the industry displayed "hesitancy and delayed decision-making."
Beyond tariffs, manufacturers also contended with increased prices and supply chain disruptions, according to Smith. These issues arose as global supply chains adjusted to the effects of the tariffs.
Industry representatives have voiced little surprise at the report's findings. Dennis Darby, president of Canadian Manufacturers and Exporters, stated manufacturing and export leaders from Canada, the U.S., and Mexico discussed the prevailing trade uncertainty last week in Washington, D.C.
Tariffs create economic harm, but the inconsistent nature of President Trump’s continuing threats also damages confidence, Darby explained. Companies are delaying investment decisions until the policy landscape becomes clearer.
"Everybody’s sitting on their hands. Nobody wants to make a long-term decision until we understand what the U.S. president quote-unquote wants," Darby said.
