The unadjusted Ivey PMI climbed almost 10 points to 65.2 last month, matching its highest reading since May 2013. Compared with a year ago the index was up fully 13 points. More importantly, adjusted for seasonal distortions, the PMI told a similarly upbeat story with a 4.1 point increase on the month to 62.3, its strongest level since October 2013.
However, with tomorrow's May labour force survey in mind, the adjusted employment sub-index weighed in at only 51.8, on the right side of the 50 expansion threshold but not by much and so potentially indicative of a meagre gain in payrolls. At the same time, deliveries (45.6) were somewhat slower than in April (46.2) while inventory accumulation (59.5 after 53.2) showed a significantly larger increase. Finally, prices (64.4 after 57.8) continued to rise and more quickly than last time.
The May results suggest that after a solid performance in April economic activity accelerated last month. However, with inventory accumulation unusually high, it may be that strong output last month will have been at the expense of June. Still, the survey leaves second quarter real GDP growth on course for something close to, if not stronger than, the BoC's most recent 1.8 percent (saar) forecast and should have few immediate implications for monetary policy.
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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