6 avril (Reuters) – The Canadian 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 fuel price increases increased operating costs, according to data from the S&P Global PMI index published on Monday.
The main business activity index rose 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 service sector endured another challenging month in March, with activity and new business declining again, albeit at a slower pace than in recent months,” said Paul Smith, chief economist at S&P Global Market Intelligence. “The impact of the war in the Middle East has led to increased uncertainty and a delay in decisions by customers, even though companies remain convinced that a prompt resolution of the conflict would promote a rebound in activity.”
The conflict caused a surge in oil prices, clouding global inflation prospects.
The Canadian economy is also being hit hard by sectoral tariffs imposed by the United States and uncertainty surrounding the negotiations of the Canada-United States-Mexico Agreement (CUSMA), the North American trade pact set to be reviewed by July 1.
The new orders component 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, mainly due to higher fuel and transportation costs,” Mr. Smith explained.
The input price index rose to 62.3, its highest level since June, up from 57.1 in February.
The only glimmer of hope was the future activity index reaching a six-month high of 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 50. On Wednesday, further data showed that activity conditions in the Canadian manufacturing sector were stagnant in March, with the S&P Global Manufacturing PMI index falling to 50.0 from 51.0 in February. (Reporting by Fergal Smith; editing by Chizu Nomiyama)
