TORONTO (Reuters) - Purchasing activity in Canada rose more than expected in January, according to Ivey Purchasing Managers Index data released on Wednesday, an early upbeat signal for the economy this year.
The seasonally adjusted index rose to 58.9 in January from 52.8 in December. Analysts polled by Reuters had expected an adjusted reading of 53.6.
“The improvement in global confidence to start the year is an encouraging development and follows at least a partial detour around the fiscal cliff in the United States and a period of relative calm across the euro zone,” David Tulk, chief Canada macro strategist at TD Securities, wrote in a research note.
Tulk noted the data’s three-month moving average stabilized at 53.1 in January, and predicted the index could pick up further in coming months.
The Ivey employment index rose to 53.8 from 49.2 in December, its lowest reading since May of last year.
A reading below 50 indicates that the pace of activity contracted from the previous month.
Market players are now awaiting official employment numbers for January due on Friday. Analysts expect that Canada’s labor market likely came back to earth last month after some gravity-defying job gains at the end of 2012, and forecast almost no new hiring and a rise in the unemployment rate.
The seasonally unadjusted Ivey PMI index for January rose to 54.8, from 43.1.
The direction was in line with the RBC Canadian Manufacturing PMI report, which last week showed Canadian manufacturing growth eked out a modest gain in January after the economy appears to have ended 2012 on flat note.
The Bank of Canada has forecast a sluggish start to 2013, but said growth will gather momentum throughout the year as business investment and exports strengthen and temporary energy sector disruptions end. Annual growth in 2013 should be 1.9 percent, compared with the previous 2.2 percent forecast, the bank said.
Reporting by Claire Sibonney; Editing by Peter Galloway