Canada’s services PMI shows sector shrinking for fourth straight month

Canada's services sector contracted for the fourth consecutive month in September, according to S&P Global's services PMI data released on Monday. The Business Activity Index rose to 48.3, but remained below the crucial 50 mark, indicating economic contraction. S&P Global's economics director, Paul Smith, noted that September proved to be a challenging month for businesses, with reductions in output and new work.

The declines were primarily attributed to tariffs and the ongoing war in Iran, which created significant uncertainty, reduced export trade, and increased operating expenses. The United States and Canada have imposed a series of counter-tariffs since early 2025, while the US recently banned imports of Canadian alcoholic beverages, motorcycles, and dairy products.

The new business index fell to 48.5, marking the fifth consecutive month of decline as new export business fell at a steeper rate compared to August. The input price index increased to 62.2 from 61.7 in August, reflecting rising cost pressures. Despite these challenges, improved sentiment due to uncertainty easing lifted the future activity index to a five-month high of 61.4.

The overall S&P Global Canada Composite Purchasing Managers' Index edged up to 48.7 in September, still below the 50 no-change mark for a fourth consecutive month. Another report showed the manufacturing PMI falling to a six-month low of 51.5 in September from 53.0 in August.