Canada's manufacturing industry posted its fastest rate of growth in more than four years in July, providing a significant boost to the country's economic outlook despite ongoing challenges in the services sector.

According to the latest business activity data, the manufacturing Purchasing Managers' Index (PMI) climbed to 53.5, indicating solid expansion driven by stronger domestic demand and increased factory production. At the same time, the services PMI improved modestly to 49.1, remaining below the growth threshold of 50 as businesses continued to face economic uncertainty and softer customer demand.

Economists said the rebound in manufacturing demonstrates the resilience of Canada's industrial base, with producers benefiting from improved production levels and healthier order books. However, businesses continue to monitor trade conditions, input costs and global market uncertainty.

Industry analysts believe stronger manufacturing activity could support employment, exports and business investment in the coming months, particularly if domestic demand remains stable and supply chains continue to improve.

The latest figures suggest Canada's economy is showing signs of rebalancing, with industrial production helping offset slower growth in service-based industries as policymakers and investors monitor broader economic conditions.