TORONTO (Reuters) - The pace of purchasing activity in the Canadian economy fell to its lowest level in almost a year in June, according to Ivey Purchasing Managers Index data released on Friday.
The data showed the seasonally adjusted index fell to 49.0 in June from 60.5 in May. Analysts polled by Reuters had forecast a reading of 55.8. The index was last below the 50 level in July 2011, when it was 46.8.
Any index reading below 50 indicates that activity contracted from the preceding month.
“In light of renewed euro-zone stresses and slowing global growth, the theme of caution does not respect international borders,” David Tulk, chief Canada macro strategist at TD Securities, said in a research note.
“Despite a more advanced economic recovery, optimism among Canadian businesses has understandably faded,” he added, noting that the report was presaged by weak U.S. ISM manufacturing data earlier this week.
The data showed the U.S. manufacturing sector unexpectedly contracted in June for the first time in three years.
Ivey’s employment index rose to 59.3 in June from 46.3 in May, but that data was overshadowed by an official report released earlier on Friday that showed Canada’s job growth slowed in June for a second straight month.
The Statistics Canada jobs report was a reality check after outsized employment gains earlier this year with business confidence worsening due to the European debt crisis and the stalled U.S. economy.
A separate PMI report released earlier this week by Royal Bank of Canada further complicated recent conflicting signals about the domestic economy. It showed Canadian manufacturing activity climbed in June to its highest level since September, helped by rising orders from abroad.
The Ivey PMI on Friday also showed inventories rose to 53.9 in June from 51.1 in May, and supplier deliveries edged up to 51.1 in June from 47.9 in the previous month.
The Ivey PMI’s unadjusted index slowed to 55.3 in June from 66.3 in May.
Reporting by Claire Sibonney; Editing by Peter Galloway