By Fergal Smith
TORONTO, Oct 5 (Reuters) – Canada’s services economy contracted for a fourth straight month in September as tariffs and the war in the Middle East contributed to economic uncertainty, S&P Global’s Canada services PMI data showed on Monday.
The headline Business Activity Index rose to 48.3 last month from 46.8 in August but remained below the 50 mark. A sub-50 reading indicates contraction in the sector.
• “September once again proved to be a difficult month for businesses, with net reductions in output and new work both signalled,” Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
• “These declines were again closely associated with tariffs and the war in Iran, which resulted in a high degree of uncertainty, lower levels of export trade and operating expenses being raised to an uncomfortably high degree.”
• The United States and Canada have adopted rounds of counter-tariffs since early 2025, while a US import ban on many Canadian alcoholic beverages, motorcycles and dairy products took effect last week.
• With a reading of 48.5, the new business index was below the 50 threshold for a fifth consecutive month as new export business declined at a steeper rate than in August.
• The input price index rose to 62.2 from 61.7 in August, reflecting the rise in cost pressures.
• Still, hopes that uncertainty could ease helped lift sentiment, S&P Global said. The future activity index rose to 61.4 from 56.4 in August, notching a five-month high.
• The S&P Global Canada Composite Purchasing Managers’ Index edged up to 48.7 in September from 47.8 in August but was stuck below the 50 no-change mark for a fourth month in a row.
• Data on Thursday showed that the S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to a six-month low of 51.5 last month from 53.0 in August.
(Reporting by Fergal Smith; Editing by Chizu Nomiyama )
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