Economy
Canada's Services Sector Shrinks for Fifth Straight Month in October, PMI Shows
Canada's services activity contracted for a fifth straight month in October as trade uncertainty and rising prices weighed on demand, with new export business posting its steepest decline since November 2025.
Photo: Forextime.com / Wikimedia Commons (CC BY 2.0). Photo shows a stock market concept, not Canada's services sector.
Canada's services economy contracted for a fifth straight month in October as trade uncertainty and rising prices weighed on activity, S&P Global's Canada services PMI data showed on Wednesday.
The headline Business Activity index edged lower to 48.1 last month from 48.3 in September, extending a string of sub-50 readings since June. A reading below 50 indicates contraction in the sector.
"The performance of Canada's service sector remained subdued in October," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. "Ongoing economic uncertainty, linked to the Canada-US trading relationship and rising prices, continued to undermine demand and confidence."
Demand showed the clearest weakness. The new business index dipped to 48.0 from 48.5 in September, as new export business posted the steepest decline since November 2025. Canada and the United States have slapped billions of dollars in tariffs on each other in recent months, and the US is the destination for about 70% of Canada's exports.
Cost pressures, meanwhile, kept building. The input prices index rose to a three-month high of 63.9 from 62.2 in September, while the prices charged measure was unchanged on the month at 53.4. "Inflation remains elevated and continued to be driven higher by fuel surcharges, rising transportation costs and tariffs, but efforts to pass these on to clients was again limited by a weak demand environment," Smith said.
Sentiment remained historically subdued, S&P Global said. The future activity index fell to 57.7 from 61.4 in September, and the broader composite index declined to 48.1 in October from 48.7 in September, remaining below the 50 no-change mark for a fifth month in a row.
The weakness was not confined to services. Data on Monday showed that the S&P Global Canada Manufacturing Purchasing Managers' Index declined to 49.6 last month from 51.5 in September, marking the first move below the 50 threshold this year.
Source: Reuters
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