6 avril (Reuters) – Canada’s services activity index contracted for the fifth consecutive month in March. Uncertainty related to the conflict in the Middle East weighed on new orders, while rising fuel prices increased operating costs, according to data from the S&P Global PMI index published on Monday.
The main business activity index rebounded to 47.2 last month, up from 46.5 in February. Although this is its highest level in five months, the index remains below the 50 threshold that separates growth from contraction.
“The Canadian services sector faced another tough month in March, with activity and new business declining again, although at a slower pace than in recent months,” said Paul Smith, chief economist at S&P Global Market Intelligence. “The impact of the Middle East conflict has led to increased uncertainty and delayed decisions among clients, even though companies remain convinced that a swift resolution of the conflict would promote a rebound in activity.”
The conflict caused a surge in oil prices, darkening global inflation prospects.
The Canadian economy is also being hit hard by sectoral customs tariffs imposed by the United States and the uncertainty surrounding the negotiations of the Canada-United States-Mexico Agreement (CUSMA), the North American trade pact set to undergo a review by July 1.
The component of new orders remained in contraction territory for a 16th consecutive month, despite a slight increase to 47.7 from 46.9 in February.
“The current business environment is clearly challenging, with companies reporting a sharp increase in operating expenses during the month, primarily due to higher fuel and transportation costs,” Mr. Smith noted.
The input price index climbed to 62.3, its highest level since June, up from 57.1 in February.
In a glimmer of hope, the future activity index reached a six-month high at 61.9.
The S&P Global composite PMI index for Canada slightly improved to 47.6 in March from 47.1 in February, marking its fifth consecutive month below the 50 mark. On Wednesday, other data showed that business conditions in the Canadian manufacturing sector stagnated in March, with the S&P Global manufacturing PMI falling to 50.0 from 51.0 in February. (Reporting by Fergal Smith; Editing by Chizu Nomiyama)
