Canada Services PMI Rises to 47.2 in March as War Weighs on Demand, Activity

By Robb M. Stewart

Activity in Canada's services industry remained in decline last month as the geopolitical uncertainty stirred up by the Iran war weighed on market demand and lifted costs, data released Monday showed.

The S&P Global Canada services purchasing managers index nudged up to 47.2 in March, a further improvement after advancing to 46.5 the month before but still indicating a solid decline for the sector and a fifth successive month below the 50 threshold separating contraction from expansion.

Business services and transport and storage companies recorded especially acute falls in output during March, S&P Global's survey found.

"The impact of the war in the Middle East has led to heightened uncertainty and delayed decision making amongst clients, although firms are confident that a swift resolution would lead to an uplift in activity," said Paul Smith, economics director at S&P Global Market Intelligence.

Manufacturing activity in Canada weakened in March, with S&P Global's purchasing managers index for the industry cooling to 50 for the month after a second straight month signaling growth with a reading of 51 in February.

Canada's economy is on track to show modest growth in the first quarter of the year, before the full shock of higher oil prices and the fallout from the Iran war are felt. Gross domestic product ticked up 0.1% in January from a month earlier as growth in oil and gas extraction and in construction helped to counter a pullback in manufacturing. Advance data from Statistics Canada indicates the pace accelerated to 0.2% growth in February as the automotive industry recovered from extended winter shutdowns at Ontario assembly plants.

S&P Global's services survey showed levels of new business received by companies in the sector continued to decline in March, albeit at the softest pace in the last five months. There were many reports that the business environment remained challenging, and that securing sales had become more difficult due to the onset of war in the Middle East, S&P Global said.

War also has had a direct impact on operating expenses, and March's survey showed input price inflation accelerated to a nine-month high thanks to increases in fuel and transportation costs. Services companies have responded by increasing their own charges, though pricing power has been somewhat contained by competitive pressures and the tough business backdrop, S&P Global said.

Looking ahead, service providers signaled a higher degree of confidence in the outlook and the survey's measure of sentiment hit its highest level in six months. Some of this improvement was based on forecasts that demand and activity will strengthen amid hope that there may be a resolution to U.S. tariffs and the Middle East conflict, S&P Global said.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

April 06, 2026 10:14 ET (14:14 GMT)