By Fergal Smith
TORONTO, March 4 (Reuters) - Canada's services economy contracted for a fourth straight month in February as an uncertain trading environment contributed to declines in activity and new business, S&P Global's Canada services PMI data showed on Wednesday.
The headline Business Activity Index edged up to 46.5 last month from 45.8 in January but remained below the 50 no-change mark. A reading below 50 shows deterioration in activity.
"Canada’s service sector economy remained mired in a downturn during February, with both activity and new business falling again – albeit to weaker degrees," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
Canada's economy has been badly hurt by the U.S.-led trade war, while investors have worried about uncertain negotiations around the United States-Mexico-Canada Agreement, a North American trade pact, which is set for review by a July 1 deadline.
The measure of new business remained in contraction for a 15th straight month even as it edged up to 46.9 from 44.9 in January.
"This lack of new work continued to weigh on employment numbers which declined further over the month although, more positively, firms signalled some confidence that activity will improve over the coming year," Smith said.
The Future Activity Index rose to 60.8, which was its highest level since October.
Another bright spot was an easing of cost inflation. The Input Prices Index fell to 57.1 from 58.0 in January, marking its lowest level since September 2024.
The S&P Global Canada Composite PMI Output Index edged up to 47.1 from 46.4 in January, marking its fourth consecutive month below the 50 threshold.
On Monday, data showed that business conditions in Canada's manufacturing sector improved for the second month running in February. The S&P Global Canada Manufacturing PMI rose to 51.0 from 50.4 in January, posting its highest level since January 2025.
(Reporting by Fergal Smith; Editing by Chizu Nomiyama)
((fergal.smith@thomsonreuters.com; +1 647 480 7446))