Key facts
- Canada's services sector contracted for the second consecutive month in July.
- The S&P Global Canada services PMI increased to 49.1 in July from 47.1 in June.
- New export business and overall business confidence declined.
- Input costs, including energy and fuel expenses, saw a significant rise.
- The composite PMI, which includes manufacturing and services, also showed a contraction at 49.7.
Canada's services sector experienced a contraction for the second consecutive month in July, according to S&P Global's Purchasing Managers' Index (PMI) data. The Business Activity Index rose to 49.1 from 47.1 in June, but remained below the 50 threshold that indicates expansion. This downturn was attributed to economic uncertainty, depressed market demand, and a challenging business climate influenced by tariffs and geopolitical events, including new U.S. tariffs on Canadian goods.
New business also contracted for the third month in a row, with new export business seeing an accelerated decline. Business confidence in the future outlook fell to its lowest point since June 2025. Rising input costs, particularly for energy and fuel, further exacerbated the difficult environment, pushing the Input Prices Index to 64.0 from 61.2 in June.
Despite the weakness in the services sector, the S&P Global Canada Composite PMI improved to 49.7 in July from 47.9 in June. Data released earlier showed that the manufacturing sector expanded at its fastest pace in over four years, with the Manufacturing PMI rising to 53.5 from 53.0 in June.