Canada's services PMI shows sector downturn gathering pace in January

By Fergal Smith

TORONTO, Feb 4 (Reuters) - The downturn in Canada's services economy deepened in January as trade uncertainty contributed to declines in activity and new business, S&P Global's Canada services PMI data showed on Wednesday.

The headline Business Activity Index ?fell to 45.8 last month from 46.5 in December, marking a third straight monthly decline in ?service sector output. A reading below 50 shows deterioration in activity.

"The ?downturn in Canada's service sector unfortunately gathered pace during ?January with both ?activity and new business volumes declining to greater degrees than at the end of last year," ?Paul Smith, economics director at ?S&P Global Market Intelligence, said in a statement.

The new business measure posted its 14th straight month of contraction, falling to ?44.9 from 45.6 in December.

"As ?has been ?the case for many months now, tariffs and trade uncertainty, plus broader market instability, remained dominant themes amongst survey participants when ?considering reasons for their ongoing subdued business performance," Smith said. Canadian Prime Minister Mark Carney - citing U.S. tariffs on key Canadian imports - has pushed to diversify trade away from the United States, which takes around 70% of all Canadian exports under the terms of the U.S.-Mexico-Canada ?free ?trade deal. The USMCA pact is set for review by a July 1 deadline.

One bright spot was an easing of ?inflation pressures. The input prices index fell to 58.0 from 60.0 in December, posting its lowest level since September 2024, as competition among vendors limited their ability to raise prices.

The measure of prices charged also declined.

The S&P Global Canada Composite PMI Output Index dipped to 46.4 last month from 46.7 in ?December.

Data on Monday showed that Canada's manufacturing sector expanded in January for the first time in a year. The S&P Global Canada Manufacturing PMI was at 50.4, up ?from 48.6 in December. (Reporting by Fergal Smith; Editing by Chizu Nomiyama )