Canada's Ivey PMI index surges in May

Thu Jun 7, 2012 12:04pm EDT
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By Jon Cook

TORONTO (Reuters) - The pace of purchasing activity in the Canadian economy rose sharply in May from April, the Ivey Purchasing Managers Index showed on Thursday, but a subindex signaled a steep drop in business employment levels.

The seasonally adjusted index rose to 60.5 in May from 52.7 in April. Analysts polled by Reuters had forecast a reading of 55.

Any index reading above 50 indicates that activity increased from the preceding month. The May number was the strongest since February's reading of 63.5, but was off January's 66.5 reading and December's 64.1.

"While the rise in the headline index was encouraging, greater focus will be placed on the sharp drop in the employment index," Mazen Issa, Canada macro strategist at TD Securities, said in a research note.

"Given the volatility of this index, we would place greater stock in other manufacturing surveys which suggest that employment in this sector was more constructive than the Ivey PMI would imply."

Ivey's employment index fell to 46.3 in May, the lowest level since February 2010, from 52.2 in April.

A separate PMI report released last week by Royal Bank of Canada (RY.TO: Quote) showed Canadian manufacturing activity increased in May at the fastest pace in eight months as businesses ramped up production and hiring to cope with rising demand from customers in the United States and Asia.

The RBC report came after recent Statistics Canada numbers showed the Canadian economy had a two-month mini-boom in job creation in March and April.   Continued...