Canadian Business Activity Hits An 11-Month High

[DailyFx]

Burdensome exchange rates, fading US demand and record prices for raw materials apparently couldn't slow business activity in Canada. The Ivey Purchasing Managers Index for last month rose more quickly than expected in a significant 4.9 point jump to a 62.5 reading. Historically, this marks the fastest pace of growth for the recently struggling sector since June of last year, suggesting other trade partners are filling in for the lack of demand in the US; and the 12.7 percent pull back in the Canadian dollar since its Novmeber highs is merely catalyzing an otherwise strong GDP component. Looking into the components of the indicator, there is still reason to doubt this sharp jump in activity will persist into future months. The most notable change came from the prices gauge which soared to 82.9 - the highest reading on records going back to 1999. On the other hand, inventories are building while supplier deliveries are still contracting as denoted by the 45.7 reading (a reading below 50.0 points to a contraction). On the other hand, the improvement to the employment component is well-timed. With the government's employment report due tomorrow, the six-month high 59.3 reading from one of the worst sectors for hiring trends in the past two years may point to strength in overall labor conditions. - John Kicklighter, Currency Analyst for DailyFX.com