Purchasing activity up, but at slower pace

By Frank Pingue

TORONTO (Reuters) - Canadian purchasing activity rose at a slower pace in August, the Ivey Purchasing Managers Index showed on Friday, suggesting the country is feeling pressure from the U.S. economic slowdown.

The index, a joint project of the Purchasing Management Association of Canada and the Richard Ivey School of Business, fell to 51.5 in August from 65.5 in July. That missed market expectations for a reading of 63.0.

A reading of 50.0 indicates that activity remained flat from the preceding month, while a higher reading indicates an increase and a lower reading reflects slowing or a decrease.

The Ivey employment index rose to 53.0 in August from 46.3 in July, while the prices index fell to 72.7 from 80.9.

The Ivey index is based on figures from 175 members of the Purchasing Management Association of Canada and is roughly equivalent to the U.S. Institute of Supply Management indexes.

Unlike ISM, Ivey makes no distinction between manufacturing and services, and as its index is not seasonally adjusted it can be prone to sharp moves.

"Though often a volatile number, the Ivey PMI suggests that activity by purchasing managers is moderating," wrote Charmaine Buskas, senior economics strategist at TD Securities. "This is consistent with the overall retrenchment in the economy."

According to Buskas, the seasonally adjusted headline number for Ivey was 55.4, which indicates modest growth. She also said the employment index tends to correlate with the latest jobs data that showed the Canadian economy created jobs in August after a contraction in July.