The unadjusted Ivey PMI rebounded back above the 50 growth threshold last month. At 53.8, the headline index was up 4.4 points versus its July reading but still 1.8 points weaker than in August 2015. More significantly, the seasonally adjusted measure showed a sizeable 4.7 point drop to 52.3. This left the adjusted index in positive growth territory for a third consecutive month but close enough to it to signal only a modest rate of expansion.
Amongst the adjusted results, the employment sub-index slumped some 12.6 points to a lowly 46.9, potentially, but certainly not necessarily, pointing to a weak August labour force survey on Friday. Elsewhere, delivery times (46.1 after 44.7) continued to shorten but not as quickly as in July, while inventories (61.2 after 55.4) accumulated at their fastest rate since January. Prices (56.7 after 57.5) remained on a clear upward trend, albeit rising slightly less sharply than last time.
The PMI findings suggest that August was at best a moderate month for the Canadian economy. The labour market looks to have weakened and a run-up in inventories could hit output in September. With little apparent change in inflation, if accurate today's data would increase the likelihood of BoC easing before year-end.
The Ivey purchasing Managers' Index (PMI) measures purchasing activity as indicated by a panel of purchasing managers selected geographically and by sector of activity to match the Canadian economy as a whole. The PMI includes both the public and private sectors and is based on month-end data. Five categories are covered in the survey: purchases, employment, inventories, supplier deliveries and prices. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting).
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.