Canada's Economic Growth Loses Momentum with PMI Drop

Canada's Ivey Purchasing Managers Index (PMI) fell to 54.1 in July, down from 59.7 in June, indicating a slowdown in economic expansion but not a contraction.

The seasonally adjusted index, which tracks the pulse of Canadian business activity, remains above the 50 threshold that separates growth from contraction, but the notable drop signals a cooling in the pace of economic growth.

According to the Ivey Business School, which publishes the index, the decline was broad-based, with both employment and inventory components weakening. The supplier deliveries index also eased, indicating shorter delivery times, which often points to softer demand conditions.

The Bank of Canada is closely monitoring economic data to determine the path of interest rates, and a sustained decline in the PMI could support the case for a pause in rate increases, as it suggests that the economy is losing steam.