The S&P Global Canada Services Business Activity Index rose to 48.3 in September 2026 from 46.8 in August, but remained below the critical 50.0 threshold that separates expansion from contraction. Canada’s service sector continued to operate in a difficult business environment, with both activity and new business still declining, though at a slower pace, amid ongoing uncertainty over tariffs and the war in Iran.
Tariffs and elevated energy prices contributed to a steeper rise in operating costs. However, intense competitive pressures constrained firms’ ability to pass these higher costs on to clients, pushing output price inflation down to a seven-month low.
Staffing levels fell in line with weaker activity and reduced new business, a trend compounded by persistent challenges in recruiting suitably skilled workers. Even so, firms became more optimistic about the future, with business sentiment strengthening to its highest level since April.
