The Ivey Purchasing Managers Index (PMI) for Canada rose to 53.3 in June, up from 48.9 in May when adjusted for seasonal changes. Without seasonal adjustments, the PMI increased to 54.6, compared to 53.8 the previous month. Employment in the Ivey Index fell to 49.5 from 51.1. Inventories dropped to 50.6 from 54.9, and supplier deliveries decreased to 44.7 from 47.5. The price index part of the Ivey Index went up, reaching 70.2, up from 66.9 last month. A PMI above 50 is usually a good sign. With the Ivey PMI back above 50, both seasonally adjusted and unadjusted, it suggests a slight increase in Canada’s overall economic activity in June. This seems positive at first glance, as readings above 50 typically indicate growth rather than decline. However, we need to look deeper into the numbers to fully understand the situation. For example, employment dropped below 50 to 49.5, indicating that hiring is slowing down. Fewer businesses are reporting growth in payrolls compared to the previous month. Although overall index levels rose, this suggests that while companies see more activity, they are hesitant or unable to hire more staff. Such situations can lead to wider issues for corporate profits, similar to what we’ve seen in past productivity shocks. Inventories also fell — although 50.6 is above contraction, the drop from 54.9 last month is significant. A decline in inventory can mean that demand exceeded expectations or that companies are cautious and not restocking. If they’re being cautious, it could point to lower future expectations. The slowdown in supplier deliveries to 44.7 fits this trend. Delays in deliveries often indicate bottlenecks or logistical issues, affecting manufacturing inputs and costs. The price index is another concern, jumping to 70.2. This significant increase points to rising input costs. Constraints on supply might be driving this up, and we should also consider how currency exchange rates affect Canadian imports. Over time, this price growth could lead to inflation risks or squeeze profits in sectors with limited pricing power. From a trading perspective, we see mixed signals. The PMI headline suggests confidence, but the labor and supply metrics indicate that caution remains. The sharp increase in prices is particularly noteworthy, especially when predicting input volatility and inflation sensitivity in the near future. Inflation-linked instruments may see more movement than usual in the coming months. We need to watch if firms hold back on hiring or if this month’s employment numbers are just a temporary dip. If the supplier delivery volumes stay low or decrease further, we may see short-term price disruptions. Overall, the market is still trying to find its way. The data shows rising cost pressures, declining confidence in employment, and a cautious approach from firms. Any future strategies must consider this cautious growth — not widespread expansion, but a mixed return to activity with clear pressure points.

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