Canada: Manufacturing falls more than expected in October
November 4, 2010
The Ivey purchasing managers index (PMI), sponsored by the Richard Ivey School of Business and the Purchasing Management Association of Canada, fell from 70.3 points in September to 56.7 points in October. The reading represented the first decline since July and came in below expectations of the market, which had anticipated the index to decline only slightly to 69.7 points. The fall triggered further weakening of the Canadian dollar against the US currency and raised concerns over the resilience of the Canadian recovery. A reading above 50 indicates that the manufacturing sector is expanding, while a reading below 50 implies contraction. The October contraction was driven by two particular categories of the PMI. Employment fell 3.1% (September: +3.2% month-on-month), while inventories dropped 12.1% month-on-month (in comparison to a 3.2% increase reported in the previous month). Moreover, inventories were the only category to remain below the 50-point threshold at 46.4 points. Deliveries and prices increased 5.6% and 2.5% respectively but were not sufficient to offset the downward pressure on the overall performance of the index.