By Fergal Smith
TORONTO, Aug 6 (Reuters) - Canada's services economy contracted for a second straight month in July as economic uncertainty depressed market demand and business sentiment, S&P Global's Canada services PMI data showed on Thursday.
The headline Business Activity Index rose to 49.1 last month from 47.1 in June, but it signaled a contraction by remaining below the 50 no-change mark.
"Latest PMI data point to another month of underwhelming service sector performance during July," Paul Smith,
economics director at S&P Global Market Intelligence, said in a statement. "This was in line with a challenging business climate as tariffs and geopolitics continue to dominate both near-term activity and the outlook for the coming year."
The U.S. announced new tariffs on nearly $20 billion worth of Canadian goods last month.
The New Business Index remained below the 50 threshold for a third straight month. The data also showed an accelerated contraction in new export business, while confidence in the outlook dropped to its lowest level since June 2025.
"Adding to the challenging environment was the continuation of steeply rising input costs, again linked to tariffs and the crisis in the Middle East pushing up energy and fuel expenses," Smith said.
The Input Prices Index rose to 64.0 from 61.2 in June. The prices charged measure also edged higher.
The S&P Global Canada Composite Purchasing Managers' Index rose to 49.7 last month from 47.9 in June, weighed down by the decline in service sector activity.
Data on Tuesday showed that the S&P Global Canada Manufacturing PMI edged up to 53.5 last month from 53.0 in June, marking the fastest pace of expansion in more than four years.
(Reporting by Fergal Smith; Editing by Paul Simao)
