By Fergal Smith
TORONTO, Sept 3 (Reuters) - Canada's services economy contracted at its steepest pace in six months in August as rising trade tensions and geopolitical instability weighed on new business, S&P Global's Canada services PMI data showed on Thursday.
The headline Business Activity Index fell to 46.8 last month from 49.1 in July, marking its lowest level since February. A reading below 50 indicates contraction in the sector.
• “Against the backdrop of escalating trade tensions with the U.S.
and the ongoing conflict in the Middle East, the underlying health of Canada’s service sector continued to suffer in August," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
• "Activity and new business volumes fell again, and to greater degrees as ongoing uncertainty meant clients remained reluctant to commit to new contracts."
• The new business measure was at 46.1, its lowest level since January and down from 48.4 in July.
• The U.S. imposed new 50% tariffs on $20 billion of Canadian imports on August 22 after talks between the two countries collapsed.
• "Confidence about the future was at its lowest level in over a year, with rising prices also seen as a threat to future business performance," Smith said.
• The future activity index declined to 56.4 from 57.5, posting its lowest level since June 2025, while rising energy prices helped underpin input prices. The input price measure remained elevated and above trend even as it dipped from July, S&P Global said.
• The S&P Global Canada Composite Purchasing Managers' Index fell to 47.8 last month, its lowest level since March, from 49.7 in July, driven by weakness in the service sector.
• Data on Tuesday showed that the S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) edged down to 53.0 in August from 53.5 in July but was indicating expansion for a fifth straight month.
(Reporting by Fergal Smith; Editing by Paul Simao)
