• Services PMI Business Activity: 47.1 vs 50.6 in May (back into contraction; lowest since February).
• Composite PMI: 47.9 vs 50.8 in May (overall private sector returned to contraction).
• New business: Fell for a second consecutive month as high prices and geopolitical uncertainty weighed on demand.
• New export business: Declined again, although the pace of contraction was the slowest in nearly two years.
• Input cost inflation: Eased sharply from May’s four-year high but remained above historical norms.
• Selling price inflation: Slowed to a three-month low as firms faced weaker pricing power.
• Employment: Increased modestly for the second time in the past three months.
• Backlogs of work: Fell at the fastest pace since January as firms worked through outstanding orders.
• Business confidence: Dropped to its lowest level since November, reflecting concerns over geopolitical uncertainty, domestic policy, high prices, and softer demand.

A summary:

Canada’s June S&P Global Services PMI painted a weaker picture of the economy, with the sector slipping back into contraction after a brief return to growth in May.

The headline Services PMI Business Activity Index fell to 47.1 from 50.6 in May, marking the sharpest decline in activity since February and the fifth monthly contraction so far in 2026. The weakness was driven by softer demand, as businesses reported that high prices and ongoing geopolitical uncertainty caused clients to delay spending.

New business also declined for a second consecutive month, while export demand remained weak, although the pace of decline in foreign orders eased to its slowest in nearly two years.

On inflation, the report offered some encouraging news. Both input cost inflation and selling price inflation moderated from May’s elevated levels. Input costs rose at a much slower pace after reaching a four-year high in May, while firms also slowed the pace of price increases, suggesting some easing in inflationary pressures. However, businesses continued to cite elevated energy costs and wage increases as keeping overall cost pressures above historical norms.

Employment edged higher for the second time in three months as some firms added staff to improve capacity. That increase in hiring helped reduce backlogs of work, which fell at the fastest pace since January.

Business confidence weakened further, falling to its lowest level since November. Firms cited geopolitical tensions, domestic policy uncertainty, persistent inflation, and softer customer demand as key reasons for the more cautious outlook.

Overall, the report points to a softening Canadian services sector, with demand weakening enough to push activity back into contraction. The easing in inflation pressures is a positive development, but deteriorating confidence and weaker new orders suggest the sector could remain under pressure in the months ahead. The Composite PMI fell to 47.9 from 50.8, confirming that overall private-sector activity also slipped into contraction despite continued strength in manufacturing.