Canadian Services Sector Shows Signs of Recovery Despite Economic Slowdown
The Canadian services sector’s slowdown eased in July as the pace of decline in new business activity decelerated, and businesses displayed more optimism about future activity, according to the latest PMI (Purchasing Managers’ Index) services data from S&P Global.
Key Figures and Context
- General Activity Index: The General Activity Index rose to 49.3 points in July from 44.3 in June, marking the highest level since November.
- New Business Index: The New Business Index increased to 48.7 points from 46.6 points in June.
- Future Activity Index: The Future Activity Index was at 60.9 points, up from 54.9 points in June.
Andrew Harker, the Economic Director at S&P Global Market Intelligence, commented: “The latest S&P Global Canada services PMI offers hope that the challenging period faced by businesses may be coming to an end.”
Impact of US-Canada Trade Tensions
The United States (US) increased tariffs on Canadian products from 25% to 35%, but goods covered under the EU-Mexico-Canada Agreement (EMCA) remain tariff-free. In May, approximately 90% of Canadian exports to the US were exempt from tariffs under the EMCA.
Optimism Amidst Challenges
Despite the trade tensions, some businesses anticipate a boost from the upcoming World Cup in 2026, as indicated by the Future Activity Index.
Key Questions and Answers
- What is the PMI (Purchasing Managers’ Index)? The PMI is an index used to measure the health of the services sector in Canada. It’s calculated based on monthly surveys sent to purchasing managers in the services industry.
- Who is Andrew Harker, and why is his opinion significant? Andrew Harker is the Economic Director at S&P Global Market Intelligence. His opinion on the PMI data carries weight due to his expertise and understanding of the Canadian economy.
- What is the EU-Mexico-Canada Agreement (EMCA)? The EMCA is a trade agreement between the European Union, Mexico, and Canada. It aims to reduce or eliminate tariffs on goods traded between these countries.
- How does the Future Activity Index reflect businesses’ expectations? The Future Activity Index measures businesses’ optimism about their future activity levels. A higher index indicates more optimistic expectations.
