UPDATE 2-Canada's Ivey index rises more than expected

(Recasts with comments and details)

TORONTO, July 4 (Reuters) - Canadian business purchasing activity increased more than expected in June, according to the Ivey Purchasing Managers Index released on Friday, but the Ivey figures also signaled the Canadian jobs market may be weakening.

The purchasing index, the joint project of the Purchasing Management Association of Canada and the Richard Ivey School of Business, rose to 69.6 in June from 62.5 in May. That was better than market expectations for a reading of 62.0.

A reading of 50.0 indicates that activity remained flat from the preceding month, while a higher reading indicates an increase and a lower reading reflects a slowing or decrease.

"This index is not seasonally adjusted, but even when adjusting for seasonal factors, it is still a substantial rise," said Charmaine Buskas, senior economics strategist at TD Securities.

The report was a change of pace from recent domestic economic data that have shown the economy may be slowing more than the Bank of Canada had expected.

But The Ivey employment index dropped to 58.2 from 59.3 in the previous month, while the prices index climbed to 84.1 from 82.9.

According to Buskas, seasonal factors usually add 2 points to the employment index in June. With that adjustment the Ivey employment subcomponent looks weak, she said, and does not bode well for the June employment data due out next week.

In May, Canadian job growth was at its weakest level since December with the economy adding 8,400 jobs, which was below the median analyst forecast for 10,000 jobs.

The Ivey index is based on figures from 175 members of the Purchasing Management Association of Canada and is roughly equivalent to the U.S. Institute of Supply Management indexes.

Unlike ISM, Ivey makes no distinction between manufacturing and services, and its index is not seasonally adjusted, which can leave it prone to sharp moves.

The Canadian dollar rose to C$1.0155 to the U.S. dollar, or 98.47 U.S cents, from a pre-data level of C$1.0170 to the U.S. dollar, or 98.33 U.S. cents. It gave back all the gains shortly after and then moved higher again in holiday-thinned trade with U.S. markets closed for Independence Day.

"The fact that this measure isn't seasonally adjusted, doesn't control for price effects, and has a short history back to only 1999 makes it volatile and of little real use and/or market impact," Scotia Capital wrote in a note. (Reporting by Frank Pingue; Editing by Peter Galloway)