Canada’s services sector contracts for fifth straight month in October

Canada’s services economy contracted for a fifth straight month in October as trade uncertainty and rising prices weighed on activity, S&P Global’s Canada services PMI data showed on Wednesday.

The headline Business Activity edged lower to 48.1 last month from 48.3 in September, extending a string of sub-50 readings since June. A reading below 50 indicates contraction in the sector.

“The performance of Canada’s service sector remained subdued in October,” Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. “Ongoing economic uncertainty, linked to the Canada-U.S. trading relationship and rising prices, continued to undermine demand and confidence.”

Canada’s trade surplus widens to more than four-year high in September

The new business index dipped to 48.0 from 48.5 in September as new export business posted the steepest decline since November 2025.

Canada and the United States have slapped billions of dollars in tariffs on each other in recent months. The U.S. is the destination for about 70 per cent of Canada’s exports.

“Inflation remains elevated and continued to be driven higher by fuel surcharges, rising transportation costs and tariffs, but efforts to pass these on to clients was again limited by a weak demand environment,” Smith said.

The input prices index rose to a three-month high of 63.9 from 62.2 in September, while the prices charged measure was unchanged on the month at 53.4.

Sentiment remained historically subdued, S&P Global said. The future activity index fell to 57.7 from 61.4 in September.

The S&P Global Canada Composite Purchasing Managers’ Index declined to 48.1 in October from 48.7 in September, remaining below the 50 no-change mark for a fifth month in a row.

Data on Monday showed that the S&P Global Canada Manufacturing Purchasing Managers’ Index declined to 49.6 last month from 51.5 in September, marking the first move below the 50 threshold this year.