TORONTO (Reuters) -The downturn in Canada’s services economy eased in July as the pace of decline in new business activity slowed and firms grew more optimistic about the outlook for activity, S&P Global’s Canada services PMI data showed on Wednesday.
The headline Business Activity Index rose to 49.3 last month from 44.3 in June. That marked the highest level since November but still indicated a deterioration in activity.
A reading below 50 shows contraction in the sector.
“The latest S&P Global Canada Services PMI provides reasons for hope that the challenging period faced by companies may be easing off,” Andrew Harker, economics director at S&P Global Market Intelligence, said in a statement.
The U.S. has increased tariffs on Canadian goods to 35% from 25%, but products covered by the U.S.-Mexico-Canada Agreement are exempt from duties. About 90% of Canadian exports to the U.S. in May were exempt under that trade agreement.
The new business index rose to 48.7 last month from 46.6 in June, while the measure of future activity was at 60.9, up from 54.9, amid hopes for more stable market conditions. Some firms expected next year’s FIFA World Cup soccer tournament to provide a boost.
“A jump in business confidence and another month of hiring suggests that firms may be gearing up for a return to growth in the near future, something which is sorely needed given the difficulties faced by companies over the first half of the year,” Harker said.
The S&P Global Canada Composite PMI Output Index rose to 48.7 last month from 44.0 in June, posting its highest level since January.
Data on Friday showed that Canada’s manufacturing sector contracted for a sixth straight month in July. The S&P Global Canada Manufacturing PMI edged up to 46.1 in July from 45.6 in June.
(Reporting by Fergal Smith; Editing by Paul Simao)
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