Canadian Factory PMI Dips in January as Trade War Risk Dents Confidence

• Canadian manufacturing activity increased at a slower pace in January as looming U.S. trade tariffs reduced confidence in the outlook, even as moves by clients to get ahead of the taxes led to the first increase in export orders in 17 months.

• The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) fell to 51.6 in January from 52.2 in December. Still, it was the fifth straight month above the 50.0 no-change mark. A reading above 50 indicates expansion in the sector.

• “January’s survey highlighted the complex impact that possible U.S. tariffs are presently having on the Canadian manufacturing economy," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.

• "Firms noted that clients in some instances were bringing forward their orders to get ahead of these potential tariffs, and output amongst manufacturers was being raised in response," Smith said. “However, the threat of tariffs from the U.S. is leading to a huge amount of uncertainty in product markets, and firms are growing increasingly concerned about a potential trade war with a key trading partner."

• The input price index rose to 58.3, its highest level since April 2023, while the output price index was at 53.5, up from 52.3 in December. A stronger U.S. dollar, which jumped on Monday to a 22-year high against its Canadian counterpart, contributed to increased material costs, S&P Global said.

(Source: Reuters)