Canada Services Economy Continues Contraction Amid Tariffs and Geopolitics

Canada's services economy contracted for a second straight month in July due to economic uncertainty and depressed market demand, according to S&P Global's Canada services PMI data. The headline Business Activity Index rose to 49.1 from 47.1 in June but remained below the 50 no-change mark.

Paul Smith, economics director at S&P Global Market Intelligence, stated that the latest PMI data point to another month of underwhelming service sector performance during July. This was in line with a challenging business climate as tariffs and geopolitics continue to dominate both near-term activity and the outlook for the coming year.

The New Business Index remained below the 50 threshold for a third straight month, while an accelerated contraction in new export business was observed. Confidence in the outlook dropped to its lowest level since June 2025, with steeply rising input costs adding to the challenging environment.