Manufacturing leaders' confidence at the lowest in years, although bright spots ahead.

Canada Manufacturing PMI

As a result of months of uncertainties triggered by trade wars, the manufacturing PMI fell to its lowest level in years, as firms are still trying to weight what will the end state look like when all negotiations that are taking place are finally completed.

Currently sitting at 45.3, the index is reflecting concerns from business leaders around the future business conditions and the perceived uncertainty that they generate.

While we were looking at heavy impacts in the auto, the steel and the aluminum industries, so far, only the auto industry, in particular the Windsor corridor have seen consequential job losses. Steel and aluminum being important input materials with no scalable alternatives, it would seem clients are still willing to pay the price of it, with factories in the Saguenay region not seeing a significant decline in orders.

Furthermore, with strong retail sales and solid credit card spending according to RBC, the domestic activity has sustained decent levels, which is encouraging for manufacturing firms focused on serving local Canadian markets. While confidence is at its lowest, some signs are emerging that the worst of the trade war is behind us; for instance yesterday the Dow gained more than 700 points as the EU and US made solid progress on trade talks.

While disruption is still very likely, the increased understanding of the Trump playbook by economic actors is allowing firms to have a somewhat better grasp at what will be coming at them, at least partly.