Canada's manufacturing sector expanded in July at the fastest pace in more than four years as rising domestic activity boosted production and new orders, but weak international demand raised doubt over the sustainability of the increase.
The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) edged up to 53.5 last month from 53.0 in June. It marked the seventh straight month that the index was at or above the 50 threshold and the highest reading since June 2022.
A reading above 50 indicates expansion in the sector.
“PMI data for July painted a positive picture of current growth, with output and new orders both rising at faster rates on the back of firmer domestic demand," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
"Companies were suitably encouraged to take on additional workers, raising their staffing levels to bolster capacity and help support current workloads."
The output index rose to 52.6 from 52.1 in June and the new orders measure was at 53.5, up from 52.2.
"Whether growth can be sustained at its current clip is doubtful. International demand remains weak, driven lower by tariffs and a highly uncertain geopolitical environment," Smith said.
Last month, the U.S. announced new tariffs on nearly $20 billion worth of Canadian goods.
Tariffs and higher energy costs due to the Middle East conflict contributed to higher costs. The input prices index rose to 68.3, its highest level since July 2022, while worries over inflation and geopolitical uncertainty weighed on confidence.
The future output index dipped to 55.4 from 55.7 in June, marking the lowest level since March.
