Canadian factories slip into contraction in October as tariffs bite; delivery delays worst since 2022
S&P Global's Canada Manufacturing PMI fell to 49.6 from 51.5, the first reading below 50 this year. Output, new orders and exports all fell, and suppliers took longer to deliver.
Canada's manufacturers had their first bad month of 2026 in October, and the slowdown is showing up in freight.
The S&P Global Canada Manufacturing PMI, released Nov. 2, dropped to 49.6 from 51.5 in September. Any reading under 50 means conditions got worse. It is the first time this year the index has fallen below that line, and the lowest reading since December 2025.
Less output, fewer orders
Factories made less in October. It was the first drop in production since March.
New orders fell at the fastest pace in more than a year. S&P Global says survey panellists blamed tariffs and uncertainty among their customers, especially for trade with the United States. New export orders fell for a fifth month in a row, and at the steepest rate since January.
Backlogs of work fell solidly for a second month. Plants also cut staff overall for the first time since March.
Longer waits for parts
For carriers, the supply side matters as much as demand. Vendor delivery times got longer by the most since August 2022. Firms said tariffs and global conflicts caused product shortages and supply-chain disruption.
Manufacturers drew down their own stocks of inputs for a second month. Some still wanted to buy more inputs, trying to lock in supplies while tariffs shifted, products were hard to find and prices kept rising.
Costs climbing fast
Input cost inflation hit its highest level since June 2022. Companies pointed to tariffs, with steel mentioned often. Fuel was also a big factor, and freight costs kept rising, mainly because of the conflict in the Middle East. Manufacturers raised their own selling prices at the fastest rate in more than four years.
"Having enjoyed an uninterrupted run of solid growth throughout 2026 so far, Canada's manufacturing sector ran out of steam in October," said Paul Smith, economics director at S&P Global Market Intelligence.
What it means for trucking
Fewer orders and lower output mean fewer outbound loads from plants, especially on lanes into the U.S. At the same time, slower supplier deliveries and thin inventories can make inbound freight less predictable.
Confidence among manufacturers stayed well below its usual level. S&P Global says firms are worried about how tariffs and wider geopolitical problems will hit demand.
The survey covers about 400 manufacturers. Data were collected Oct. 9 to 26.