Canada's May services PMI rises to an 18-month high, but operating costs accelerate to the fastest pace in four years
- S&P Global Canada's Services PMI data shows that the business activity index rose from 49.2 in April to 50.6 in May. This marks the first time since October last year that it crossed the 50 expansion/contraction threshold, and it also set a new high since November 2024. According to S&P Global Market Intelligence's chief economist, there was a net expansion in services activity, but the growth remains fragile and masks a challenging business environment.
- The new business index fell from 50.3 to 49.8, and the employment indicator declined from 50.7 to 49.2. Clients are showing significant uncertainty about the outlook due to the situation in the Middle East, which resulted in a slight decrease in new business. Cost pressures are rising sharply; companies are reporting not only a steep increase in fuel prices but also facing higher wage expenses, which sends a warning signal to policymakers.
- The input price index rose sharply from 60.9 to 67.0, reaching its highest level since May 2022; the charge price index was at 56.7, setting a new high since July 2023. The Bank of Canada previously stated that if oil prices remain high and begin to drive up inflation, it may have to respond with consecutive interest rate hikes.
- In May, the S&P Global Canada Composite PMI climbed from 49.9 to 50.8, with both services and manufacturing output increasing. Data released on Monday showed that Canada’s Manufacturing PMI edged down slightly from 53.3 to 52.9. Potential price increases and product shortages triggered by the situation in the Middle East may have boosted customer demand.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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