Canada Services Activity Contracts for Fifth Straight Month

The S&P Global Canada Services PMI Business Activity Index edged down to 48.1 in October 2026 from 48.3 in September, remaining below the 50.0 no-change threshold for a fifth consecutive month and signaling a further contraction in activity. The decline in business activity was accompanied by a similar drop in new orders. Companies cited an uncertain economic environment, tight client budgets and slower market conditions as weighing on sales. Tariffs also continued to dampen demand, particularly for exports, which fell at the fastest pace since November 2025. Meanwhile, uncertainty surrounding Canada-US trade relations, tariffs and the war in Iran weakened business confidence, which fell from September and remained historically subdued.

The S&P Global Canada Services Business Activity Index rose to 48.3 in September 2026 from 46.8 in August, remaining below the critical 50.0 no-change mark. Canada’s service sector continued to face a challenging business climate, with activity and new business falling at slower rates amid uncertainty over tariffs and the war in Iran. Tariffs and elevated energy prices also drove a sharper increase in operating costs, but strong competitive pressures limited firms’ ability to pass these costs on to clients, with output price inflation falling to a seven-month low. Staffing levels declined in response to weaker activity and new business, exacerbated by difficulties finding suitably skilled workers. However, firms became more confident about the outlook, with sentiment reaching its highest level since April.

Canada’s S&P Global Services PMI fell to 46.8 in August 2026 from 49.1 in July, marking a third consecutive month of contraction in service-sector activity and the steepest decline since February. Activity and new business volumes fell at faster rates as ongoing uncertainty kept clients reluctant to commit to new contracts. Business confidence about the year ahead dropped to its lowest level in more than a year, with rising prices also seen as a threat to future performance. Tariffs and trade tensions with the US, along with the conflict in the Middle East and resulting volatility in international energy prices, weighed on demand from both domestic and international clients. New export business declined at a solid, albeit slower, pace in August. Meanwhile, weak and competitive demand limited firms’ ability to raise selling prices. Employment was little changed during the latest survey period after two months of modest growth.