* Ivey PMI seasonally adjusted index falls to 47.5 from 58.3
* Analysts expected adjusted reading of 58.6
* Lowest reading in over a year
* Employment at 55.1 from 56.4
By Solarina Ho
TORONTO, Dec 6 Purchasing activity in Canada
unexpectedly fell in November, according to Ivey Purchasing
Managers Index data released on Thursday, the latest report to
suggest economic weakness has carried into the fourth quarter.
The seasonally adjusted index fell to 47.5 in November from
58.3 in October. Analysts polled by Reuters had expected an
adjusted reading of 58.6.
"It's been surprisingly resilient over the prior few months.
I guess the pull-back in November is a little bit more
consistent with the recent data we've seen in Canada," said
Benjamin Reitzes, senior economist at BMO Capital markets.
"We've already seen weak GDP numbers a couple of months in a
row and the Ivey was oddly strong, so maybe it's just a bit of a
catch-up on that front."
The seasonally unadjusted index dropped to 46.4 from 58.3.
A reading below 50 on the index data indicates that the pace
of activity fell from the previous month.
"This is the lowest reading in the PMI in just over a year
and is consistent with contracting economic activity," Mazen
Issa, a macro strategist at TD Securities, wrote in a research
He added the details of the report were "less alarming" with
employment still above the 50 mark at 55.1, down slightly from
56.4 in October.
The prices index surged to 62.9 from 53.1, while the
inventory index was up at 55.6, from 48.2. The supplier
deliveries index stood at 47.9, up from 46.0.
The weakness was in line with another set of purchasing data
released on Monday. The RBC Canadian Manufacturing PMI report
showed Canadian manufacturing growth slowed for a fifth straight
month in November and hit a more than two-year low.
The reports suggest economic weakness seen in the third
quarter may extend into year end. Data out last month showed the
economy grew at a weaker-than-expected 0.6 percent annual rate
in the July-September period and was flat in September.
The GDP result fell short of the Bank of Canada's 1 percent
forecast. The central bank had forecast in October that growth
would rebound to 2.5 percent in the fourth quarter.
"It's a more dovish picture for them than what they were
assuming, but they were already on the optimistic side with
their last MPR (Monetary Policy Report), so a downgrade
shouldn't come as a surprise to anybody," said BMO's Reitzes.
Canada's economy is now likely to grow at a rate below 2
percent through this quarter and into next year, wrote TD's
Issa, who also expects the central bank to lower its forecast in
"Uncertainty from U.S. fiscal negotiations continues to
weigh on business investment and confidence, while weak U.S.
demand keeps net export activity subdued," he wrote.