Jamie Spencer
The Canadian manufacturing sector ended 2024 on a positive note, with the S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) rising to 52.2 in December, its highest reading since February 2023. This marks the fourth consecutive month of growth for Canadian manufacturers, showcasing resilience despite domestic challenges and global uncertainties.
Best Manufacturing Performance in Nearly Two Years
December’s PMI of 52.2, up slightly from November’s 52.0, signals continued expansion in the manufacturing sector. Any reading above 50 indicates growth. Paul Smith, economics director at S&P Global Market Intelligence, highlighted the sector’s robust performance:
“Canada’s manufacturing sector enjoyed a relatively positive end to 2024, with overall growth ticking up to its best level in nearly two years.”
Smith attributed the growth to increased demand, particularly from U.S. clients, as businesses brace for the potential imposition of tariffs on Canadian goods by President-elect Donald Trump in 2025.
Tariff Uncertainty Clouds Outlook
While the December results reflect strength, uncertainty looms over the sector’s future. The possibility of U.S. tariffs under the incoming Trump administration has introduced significant unpredictability for Canadian manufacturers.
“The shape and extent of these tariffs remains unknown and led to considerable uncertainty amongst firms when assessing the outlook,” Smith noted.
Domestic Challenges and Supply Chain Bottlenecks
Canada’s manufacturing growth comes despite disruptions from strikes at Canada Post and ports in Montreal and Vancouver last fall. These events created bottlenecks in supply chains, leading to longer vendor delivery times and a record increase in inventories of finished goods in December.
“Bottlenecks in domestic supply chains remained prevalent in December,” Smith added.
Global Manufacturing Struggles
While Canada’s manufacturing sector showed resilience, the global picture was less optimistic. The composite J.P. Morgan Global Manufacturing PMI fell to 49.6 in December, down from 50.0 in November, marking its fifth decline in six months. A reading below 50 indicates contraction, highlighting struggles in international markets.
Canada’s manufacturing sector ended 2024 with its strongest growth in nearly two years, reflecting resilience in the face of domestic and global challenges. However, looming uncertainty over U.S. tariffs and persistent supply chain issues could impact the sector’s performance in 2025. As manufacturers navigate these challenges, maintaining growth will require adaptability and strategic planning.
