Key facts
- Canada's services sector activity expanded in May.
- The Business Activity Index rose to 50.6.
- Operating costs increased at the fastest rate in four years.
- Economic uncertainty and rising fuel prices contributed to cost acceleration.
Canada's services sector showed signs of modest expansion in May, with the Business Activity Index climbing to 50.6. This indicates a slight increase in overall business activity within the sector. Despite this positive movement in activity, the sector faced significant headwinds related to rising operating costs. These costs accelerated at the fastest pace observed in four years. Contributing factors to this surge in expenses include heightened economic uncertainty, particularly stemming from the ongoing conflict in the Middle East, and a notable increase in fuel prices. The combination of expanding activity and rapidly increasing costs presents a complex picture for Canadian service businesses. Activity in Canada's services industry picked up slightly last month despite a fall in new business and ongoing economic uncertainty.