Canada December manufacturing index edges higher but remains below 50 for 11th month

The Canadian manufacturing sector is still struggling, with the final S&P Global Manufacturing PMI survey for December showing a reading of 48.6, slightly up from the previous 48.4 but still below 50. This indicates ongoing weakness in the Canadian economy, suggesting stagflationary pressures. New orders experienced a 'solid decline,' and employment has shrunk for the 11th consecutive month. Additionally, selling price inflation hit a six-month high. The report attributes rising prices to tariffs, which are simultaneously suppressing demand. While consumer aspects of the economy remain strong, manufacturing is falling behind. Prolonged uncertainty surrounding USMCA negotiations continues to affect sentiment. Companies are reported to be cutting purchasing activity further, while supply chain delays and higher input prices persist. Firms are cautious regarding future output, as uncertainty clouds forecasts. This report highlights the persistent difficulties in Canadian manufacturing, which has been in contraction for 11 straight months, underscoring the need for potential policy changes.