Canadian Ivey PMI Falls Less Than Expected In July, But Labor Component Contracts
Canada's Ivey Purchasing Managers Index fell less than expected to a reading of 65.5 from 69.6, versus consensus forecasts of a drop to 61.0, but nevertheless indicates that business activity in the manufacturing sector is slowing. Looking at a breakdown of the index, most components fell, but some moves were more notable than others. While price growth continues to accelerate, the index slipped to 80.9 from 84.1, pointing toward lessening inflation pressures. The biggest move was in the employment component, which plummeted to a reading of 46.3 from 58.2. This does not bode well for this Friday's Canadian employment report, as the last time the component fell below 50 (signaling contraction), the net employment change surprisingly fell negative while the unemployment rate ticked up to 6.0 percent from 5.9 percent. As a result, the Loonie's gains that have immediately followed this Ivey PMI release may be short lived. -- Terri Belkas, Currency Strategist for DailyFX.com
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