By Robb M. Stewart


Activity in Canada's services industry remained weak last month, though the pace of contraction softened considerably with stable new business and a slight rise in employment.

The S&P Global Canada services purchasing managers index rose to 49.3 in April from 46.4 the month before. While that marked an 11th consecutive month the measure has been below the 50 threshold that separates expansion from contraction, it was the highest level in 10 months.

"Another fall in activity during April reinforced the general underlying weakness that pervades the Canadian services economy," said Paul Smith, economics director at S&P Global Market Intelligence. "But there was some positivity to be found in the survey data."

Smith said activity was down only slightly last month and new business volumes stabilized after a prolonged downturn.

After stalling in the second half of last year, Canada's economy has rebounded and Statistics Canada has estimated industry-level growth was 2.5% in the first quarter. Still, on a monthly basis gross domestic product has slowed following a strong start to 2024, with growth on-month of 0.2% in February and early data pointing to essentially unchanged GDP in March.

Manufacturing activity deteriorated slightly last month after modest improvements of late, with the S&P Global Canada manufacturing PMI falling to 49.4 from 49.8 the month before as the index remained in contraction territory for a full year.

Latest data showed no change in new work, ending an eight-month period of contraction. S&P Global said services companies indicated that new projects and some unexpected client wins had led to some growth in new work but high interest rates and subdued underlying demand limited any gains. New export sales continued to fall slightly amid reports of a lack of enquiries from foreign clients, it said.

The data showed a marginal increase in employment for the third time in the past four months, with companies that took on additional workers generally doing so to support new projects or sales efforts, S&P Global said.

Companies maintained confidence in the outlook amid hopes that improved market conditions will support higher sales and activity, the survey showed.


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


(END) Dow Jones Newswires

05-03-24 1008ET