- Prior was 53.0
- Lowest since March
- Sixth straight month above 50
- New orders fall for the first time since March
- New export orders down for a fourth month
- Output still rising but at the slowest pace in six months
- Input cost inflation highest since July 2022
- Supplier delivery times longest since August 2022
- Business confidence lowest since December 2025
- Employment up for a sixth month, slowest gain since May
- Backlogs fall by the most in eight months
The headline still says growth, but the details are pour. New orders slipped into contraction, and the bulk of the 1.5-point drop in the PMI came from demand rather than supply. Tariffs and US trade friction are the main culprits, with panellists flagging client hesitancy and a fourth straight decline in export orders.
The bigger worry for the Bank of Canada is the cost side. Input prices rose at the fastest pace in more than four years thanks to the Iran war and the hit to energy prices, along with shortages and shipping delays. Delivery times are stretching the most since the post-pandemic snarl, with AI infrastructure demand also soaking up supply. That’s a stagflationary mix. Manufacturers are passing some of it along, but some firms say weak demand is limiting their pricing power.
There’s a quirk in the headline too. Longer delivery times are inverted in the PMI calculation, so supply disruptions actually flatter the index. Strip that out and the underlying picture is closer to flat.
Hiring is holding up, with firms backfilling skilled positions to service long-term contracts. But falling backlogs alongside falling orders means that support won’t last if demand doesn’t come back.
For the BOC, this is the dilemma in a nutshell: softening activity tied to trade, against a renewed jump in pipeline inflation. It’s hard to cut into that, and equally hard to justify anything hawkish with confidence sliding to the lowest of the year.
This article was written by Adam Button at investinglive.com.