FX.co ★ Canada Services PMI Rises but Signals Ongoing Contraction

In May 2025, Canada's S&P Global Services PMI increased to 45.6 from 41.5 in April, marking its highest level in three months, yet it continues to remain in contraction territory. The sector is still grappling with macroeconomic uncertainties and disruptions related to tariffs. Both activity and new business experienced declines again, albeit at slower rates. However, business confidence has risen to its highest level since January. Employment saw slight growth, contributing to a reduction in backlogs. Meanwhile, inflation in input prices has intensified, with operating costs climbing due to factors such as wages, tariffs, and supplier charges. This situation has resulted in the sharpest rise in output prices in a year. While demand shows signs of stabilization, cost pressures remain a significant concern for service providers.