Canada services PMI contracts for fifth consecutive month in October
Canada’s services activity remained in contraction in October, with weaker export demand and higher input costs adding pressure on service-sector businesses.
Canada’s services economy stayed below the growth threshold in October, according to S&P Global’s latest purchasing managers’ index. The headline Business Activity index slipped to 48.1 from 48.3 in September, extending the sector’s run of contractionary readings to five months since June. An index below 50 denotes declining activity, making the result a further indication of weak demand conditions across service businesses. [1]
Demand measures also weakened. The new-business index fell to 48.0 in October from 48.5 a month earlier, while new export business registered its sharpest decline since November 2025. S&P Global said uncertainty surrounding the Canada-U.S. trading relationship and rising prices continued to weigh on demand and confidence. The United States receives roughly 70% of Canadian exports, leaving trade-sensitive service providers exposed when cross-border demand softens. [1]
Cost conditions worsened even as firms faced limited scope to raise client prices. The input-prices index increased to a three-month high of 63.9, from 62.2 in September, with fuel surcharges, transportation costs and tariffs cited as contributors to elevated inflation. The prices-charged measure was unchanged at 53.4, and S&P Global said weak demand constrained businesses’ ability to pass higher costs through to customers. [1]
The survey also pointed to subdued expectations. Its future-activity index declined to 57.7 from 61.4 in September, which S&P Global described as historically weak sentiment. Canada’s composite PMI, covering services and manufacturing, fell to 48.1 from 48.7 and remained below the no-change mark for a fifth month. Separate data showed manufacturing activity moved below 50 in October after reading above that level in September. [1]
For businesses, the October reading signals that slower sales, weaker export orders and increasing operating costs are occurring together rather than as isolated pressures. The data do not quantify effects on individual trade-exposed industries or establish a change in tariff policy, but they point to a broader operating environment in which demand remains fragile and cost recovery is difficult. [1]
The development is significant because Canada’s services sector contracted for a fifth straight month, while new business and export business weakened and input-cost pressure intensified. It affects service firms, including trade-facing providers, through softer demand and limited ability to pass through costs. The rating is not higher because the survey reports an economy-wide services indicator rather than a new tariff action or quantified impact on a specific dashboard industry. [1]