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Canada Ivey Rises to 9-Month High as BoC stays Put

Canadian economic activity saw its most rapid expansion in nine months this January, according to data from the Ivey Purchasing Managers Index (PMI) released on Tuesday. The seasonally adjusted index rose slightly to 56.5 in January, up from 56.3 in December, marking its highest point since April.

This growth represents the most significant expansion since last April. Notably, the index for inventories rose to 50.3 from 49.1 in December. However, there were declines in several metrics: employment dropped to 57.2 from 57.9, supplier deliveries decreased to 51.8 from 57.8, and prices fell to 62.2 from 64.5. Our Take: The Ivey PMI corroborates a trend observed in other countries, indicating that economic activity is strengthening amidst diminishing inflationary pressures. This scenario is likely to prompt central banks to refrain from premature interest rate reductions, even as inflation approaches target levels. The Bank of Canada (BoC) might exercise additional caution, particularly due to the persistently high inflation in housing costs, which could be exacerbated by any premature reduction in rates.


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