Economic Indicators

Canadian services PMI rises in January; sector remains in contraction

2024.02.05 10:03


© Reuters. Skyscrapers loom over a flagpole carrying the Canadian flag in the monetary district in Toronto, March 11, 2009. REUTERS/Mark Blinch/File Photo

By Fergal Smith

TORONTO (Reuters) – Canadian service sector exercise slowed for an eighth straight month in January as new enterprise ebbed and value pressures intensified, however the tempo of decline eased from December, S&P Global Canada services PMI information confirmed on Monday.

The headline enterprise exercise index rose to 45.8 in January from 44.6 in December. In November, the index posted a close to three-and-a-half-year low of 44.5, whereas it has been under the 50 threshold that marks contraction in the sector since June.

“January’s survey data highlight an economy continuing to splutter at the start of the new year,” Paul Smith, economics director at S&P Global Market Intelligence, mentioned in a press release.

“Weak market demand, weighed down by high interest rates and a reticence amongst clients to commit to new work, was again widely reported by panellists and resulted in another noticeable contraction in business activity.”

The Bank of Canada has saved its benchmark rate of interest at a 22-year excessive of 5% since July, saying that underlying inflation was nonetheless a priority.

The PMI’s enter worth measure climbed to a three-month excessive of 61.7 from 58.7 in December.

“Upward price pressures are a timely reminder that the disinflationary road ahead is unlikely to be smooth,” Smith mentioned.

The S&P Global Canada Composite PMI Output Index, which captures manufacturing in addition to service sector exercise, rose to 46.3 in January after hitting 44.7 in December, its lowest stage since June 2020.

Data final Thursday confirmed Canada’s manufacturing PMI rebounding to 48.3 in January from 45.4 in December however remaining under the 50 threshold for the ninth straight month, the longest such stretch in information going again to October 2010.

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