Canada Ivey PMI jumps to 9-month high in Oct, near-term manufacturing prospects seem firm

Canada’s manufacturing strength, as measured by the country’s Ivey Purchasing Managers’ Index (PMI), jumped to a 9-month high during the period of October, while the index measuring delivery of products, declined during the same period, indicating that output still remains relatively subdued.

The October Canadian Ivey PMI strengthened further to 59.4 from the strong reading of 58.4 the previous month. This was the highest reading since January 2016 and also higher than the consensus forecast of 56.2. However, the deliveries index declined to 49.2 from 51.7 the previous month, which suggests that output is still relatively subdued.

Further, the inventories also increased to 53.5 from 46.7 previously and companies will be wary of boosting output unless inventories are perceived to be under control. Also, the prices index strengthened further to 61.5 from 56.8 and the highest reading for five months, which suggests underlying inflationary pressures are building.

However, the overall picture remains robust, which is further likely to boost manufacturing prospects in the near future. Meanwhile, the employment index strengthened to 57.3 from 54.0, the second-highest reading of 2016, which is likely to boost confidence in the labor market, especially after two robust monthly readings in a row.