The unadjusted Ivey PMI fell 4.1 points to 42.6 last month, its weakest reading since December 2013 when the economy was hit by especially harsh winter weather. More significantly, the adjusted index slumped fully 10 points to 45.4, its first sub-50 print in seven months and easily its lowest in recent years.
Within the adjusted results the employment sub-index was down only 1.8 points at 50.0 and so, on paper at least, suggests that Friday's labour market report should not be overly weak. Elsewhere, inventories (46.4) were unwound further but at a less marked rate than in December (41.7) and suppliers delivery times (47.9 after 54.2) were somewhat slower than at year-end. Prices (66.7 after 54.8) were surprisingly firm but should begin to reflect the impact of the drop in energy costs soon.
Speculation about another 25 basis point cut by the BoC next month has been building quite steadily following the release of disappointingly weak November GDP and a more general downward revision to employment growth last year. Today's January PMI findings provide one of the first early looks at how the economy has been impacted by the slump in oil prices and if accurate, would suggest that additional monetary easing is just a matter of time.
The Ivey Purchasing Managers Index measures month to month changes in dollars of purchases as indicated by a panel of purchasing managers from across Canada. The 175 participants in this survey have been carefully selected geographically and by sector of activity to match the Canadian economy as a whole. The index includes both the public and private sectors. Index panel members indicate whether their organizations activity is higher than the same as or lower than the previous month across the following five categories - purchases, employment, inventories, supplier deliveries and prices. The Ivey Purchasing Managers Index is sponsored by the Richard Ivey School of Business and the Purchasing Management Association of Canada.
The Ivey PMI is provided in two formats -- unadjusted and seasonally adjusted. The index shows responses to one question: "Were your purchases last month in dollars higher, the same, or lower than the previous month?" A figure above 50 shows an increase while below 50 shows a decrease.
The index measures the month to month variation in economic activity as indicated by a panel of purchasing managers. The index uses end of the month data and it covers all sections of Canada's economy. The PMI includes both the public and private sectors and is based on month end data Ivey PMI panel members indicate whether their organizations activity is higher than, the same as, or lower than the previous month across the following five categories: purchases, employment, inventories, supplier deliveries and prices.
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