FX.co ★ Canada Service Activity Remains Weak

The S&P Global Canada Services PMI experienced a decrease, settling at 45.8 in January down from 46.5. This marks a third consecutive monthly reduction in service sector output. For a fourteenth consecutive month, new business volumes have contracted, with the most recent decrease being the sharpest since April. Additionally, new export orders fell, as some companies pointed out that tariffs rendered trade with the US unfeasible. The decline in demand prompted a significant drop in backlogs, despite a fifth consecutive but slight reduction in employment. Input costs saw a significant rise due to increased supplier prices and tariffs, while competitive pressures paired with weak demand hindered firms from raising their prices. In spite of these circumstances, business confidence remained optimistic, bolstered by expectations of enhanced activity and a reduction in trade uncertainty.