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TORONTO (Reuters) - Purchasing activity in Canada unexpectedly fell in November, according to Ivey Purchasing Managers Index data released on Thursday, the latest report to suggest economic weakness has carried into the fourth quarter.
The seasonally adjusted index fell to 47.5 in November from 58.3 in October. Analysts polled by Reuters had expected an adjusted reading of 58.6.
"It's been surprisingly resilient over the prior few months. I guess the pull-back in November is a little bit more consistent with the recent data we've seen in Canada," said Benjamin Reitzes, senior economist at BMO Capital markets.
"We've already seen weak GDP numbers a couple of months in a row and the Ivey was oddly strong, so maybe it's just a bit of a catch-up on that front."
The seasonally unadjusted index dropped to 46.4 from 58.3.
A reading below 50 on the index data indicates that the pace of activity fell from the previous month.
"This is the lowest reading in the PMI in just over a year and is consistent with contracting economic activity," Mazen Issa, a macro strategist at TD Securities, wrote in a research note.
He added the details of the report were "less alarming" with employment still above the 50 mark at 55.1, down slightly from 56.4 in October.
The prices index surged to 62.9 from 53.1, while the inventory index was up at 55.6, from 48.2. The supplier deliveries index stood at 47.9, up from 46.0.
The weakness was in line with another set of purchasing data released on Monday. The RBC Canadian Manufacturing PMI report showed Canadian manufacturing growth slowed for a fifth straight month in November and hit a more than two-year low.
The reports suggest economic weakness seen in the third quarter may extend into year end. Data out last month showed the economy grew at a weaker-than-expected 0.6 percent annual rate in the July-September period and was flat in September.
The GDP result fell short of the Bank of Canada's 1 percent forecast. The central bank had forecast in October that growth would rebound to 2.5 percent in the fourth quarter.
"It's a more dovish picture for them than what they were assuming, but they were already on the optimistic side with their last MPR (Monetary Policy Report), so a downgrade shouldn't come as a surprise to anybody," said BMO's Reitzes.
Canada's economy is now likely to grow at a rate below 2 percent through this quarter and into next year, wrote TD's Issa, who also expects the central bank to lower its forecast in January's MPR.
"Uncertainty from U.S. fiscal negotiations continues to weigh on business investment and confidence, while weak U.S. demand keeps net export activity subdued," he wrote.
Editing by Jeffrey Hodgson and James Dalgleish