Canada's services PMI hits four

TORONTO, July 6 (Reuters) - Canada's services economy contracted in June as geopolitical uncertainty and elevated prices dampened demand, S&P Global's Canada services ​PMI data showed on Monday.

The headline Business Activity Index fell ‌to 47.1 last month from 50.6 in May, marking the lowest level since February. A reading below 50 shows a contraction in activity."Canada's service sector returned to ​contraction territory during June as worries related to geopolitics and ​government policies resurfaced, weighing heavily on activity and sales," Paul ⁠Smith, economics director at S&P Global Market Intelligence, said in a ​statement.The new business index was at 47.5, down from 49.8 in May, ​and confidence in the outlook dropped to its lowest level since November.

Some shipping has resumed through the Strait of Hormuz following an interim peace deal between the U.S. ​and Iran, but the months-long closure of the vital global supply ​route for oil and liquefied natural gas has lifted inflation globally.

Canada has one of ‌the ⁠highest food inflation rates among Group of Seven countries. Prime Minister Mark Carney has pledged to invest more than C$1 billion ($704.23 million) to promote competition among grocers and food processors."High selling prices were also noted as ​being a drag ​on sales, ⁠something that firms themselves were wary of, serving as a check on their pricing power," Smith said.

The prices ​charged index pulled back to 54.5 after posting in ​May a ⁠nearly three-year high of 56.7.

The S&P Global Canada Composite PMI fell to 47.9 last month from 50.8 in May, weighed by the decline in ⁠service ​sector activity.

Data on Thursday showed that the S&P ​Global Canada Manufacturing PMI edged up to 53.0 from 52.9 in May as production and ​employment rose.

($1 = 1.4200 Canadian dollars)Reporting by Fergal Smith; Editing by Paul Simao