Canadian Factory Growth Slows Amid Rising Energy Costs

Canada's factory growth slowed down in September, according to S&P Global's Canada Manufacturing Purchasing Managers' Index (PMI). The index fell to 51.5 from 53.0 in August, still above 50 which signals expansion but the weakest reading since March due to easing output and new orders.

The bigger story was inflation pressure, with the input-costs index jumping to 71.1 from 66.4, its highest level since July 2022. Supplier delivery delays were also at their most widespread since August 2022, driven by tariffs and higher global energy prices, according to S&P Global's Paul Smith.

These metrics often precede producer price increases and eventually consumer inflation. Companies may try to pass on these costs through higher selling prices or absorb them with thinner margins. The increased pressure on input costs revives mid-2022 inflation questions for markets, particularly in Canada's short-term bonds and the Canadian dollar.