- KPB & Co Research
Ivey's Purchasing Managers Index (PMI), which tracks the level of private and public sector activity around purchases, employment, inventories, supplier deliveries and prices, shows that overall economic activity in Canada has been gaining momentum since February 2019. The recent positive turn in the index is a potential inflection point relative to the negative trends that we have been seeing since April 2018. The estimate of 55.9 for May 2019, represents the second consecutive increase in the index in recent times, and beating analyst expectations of 53.0
Over the period April-2017 to December 2018, we have seen a number of increases in the Bank of Canada's key monetary policy rate along with more hawkish communication tone, which have led to a marked slowdown in economic activity. Since 2019, the Bank of Canada has toned down their communication of more rate hikes, and have opted for a more conservative monetary policy stance where they have kept interest rates unchanged.
Note: The Ivey PMI is seasonally adjusted. It shows the responses of a panel of purchasing managers who have been selected based on geography and sector of activity to match the Canadian economy. They provide an answer to the question: "Were your purchases last month in dollars higher, the same, or lower than the previous month?" A figure above 50 shows an increase while below 50 shows a decrease.