By Paul Vieira
Canada's services sector - which accounts for two-thirds of the country's output - remained in negative territory in December, with sales falling for a fifth straight month and by the most in about three years.
The S&P Global Canada services purchasing managers index remained largely unchanged in December, at 44.6 versus 44.5 in November. Readings below 50 indicate a decline in activity, and December's reading marks the seventh-consecutive month under 50.
Paul Smith, economics director at S&P Global Market Intelligence, said "many" survey respondents reported subdued demand, characterized by hesitancy among clients in committing to new sales. Several companies blamed high interest rates as a factor weighing on demand.
Earlier this week, S&P Global Canada's December PMI for manufacturing indicated an eighth straight decline and the lowest level since May 2020.
Canada's economy shrank in the third quarter, down 1.1% annualized, and weak growth is expected for the fourth quarter of 2023 and the first half of 2024. The Bank of Canada held its policy rate steady in December, at 5%, due to a weakening economic outlook. Markets expect the central bank to begin cutting rates as early as the second quarter.
The S&P services PMI report indicated that, on average, companies appear confident in growth prospects. Sentiment was at its highest level since April, "with firms confident that interest rates will be cut and result in pick-ups of activity and demand."
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
01-04-24 1031ET
