By Fergal Smith
TORONTO (Reuters) - Canadian service sector activity slowed for an eighth straight month in January as new business ebbed and cost pressures intensified, but the pace of decline eased from December, S&P Global Canada services PMI data showed on Monday.
The headline business activity index rose to 45.8 in January from 44.6 in December. In November, the index posted a near three-and-a-half-year low of 44.5, while it has been below the 50 threshold that marks contraction in the sector since June.
"January's survey data highlight an economy continuing to splutter at the start of the new year," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
"Weak market demand, weighed down by high interest rates and a reticence amongst clients to commit to new work, was again widely reported by panellists and resulted in another noticeable contraction in business activity."
The Bank of Canada has kept its benchmark interest rate at a 22-year high of 5% since July, saying that underlying inflation was still a concern.
The PMI's input price measure climbed to a three-month high of 61.7 from 58.7 in December.
"Upward price pressures are a timely reminder that the disinflationary road ahead is unlikely to be smooth," Smith said.
The S&P Global Canada Composite PMI Output Index, which captures manufacturing as well as service sector activity, rose to 46.3 in January after hitting 44.7 in December, its lowest level since June 2020.
Data last Thursday showed Canada's manufacturing PMI rebounding to 48.3 in January from 45.4 in December but remaining below the 50 threshold for the ninth straight month, the longest such stretch in data going back to October 2010.