WRAPUP 1-Canada Ivey, building data show subdued recovery

* Purchasing activity rises slightly from Oct

* Building permits fall as housing market cools

* Data suggest recovery intact, but subdued

By Louise Egan and Jennifer Kwan

TORONTO/OTTAWA, Dec 6 (BestGrowthStock) – Canadian purchasing
activity ticked higher in November and the cooling housing
market dragged down the value of October building permits as
the economic recovery advanced but at a subdued pace.

The Ivey Purchasing Managers Index showed on Monday a rise
to 57.5 in November from 56.7 in October. This was just above
the market forecast of 56. (ECONCA: )

The PMI can be used to measure business optimism and
forecast growth. A reading higher than 50 indicates activity
increased from the preceding month and a lower reading reflects
a slowing or decrease.

The value of building permits tumbled 6.5 percent in
October, Statistics Canada said in a separate report, but the
decline followed two months of gains and levels were still
comparable to those prior to the recession.

“Given the deceleration in a wide range of economic
indicators, one would expect that the Ivey PMI will remain in
the 50-60 range that is consistent with a gradual recovery
through the balance of the year and into 2011,” David Tulk,
senior macro strategist at TD Securities, wrote in a note.

The employment and prices components of the index stayed
above 50 for the month, while inventories and supplier
deliveries were below 50.

“Subjectively, the decent rise in the employment index
seems out of context with the net 15,000 jobs created in
November, a number insufficient to keep up with the natural
growth in the labor force,” said Stewart Hall, economist at
HSBC Canada.

The reports come after recent data showed Canada’s economy
gained fewer jobs than the market expected, while a separate
report showed the economy disappointed in the third quarter
with the weakest growth rate in a year. [ID:nN03271210]

Markets will next look to Tuesday’s Bank of Canada interest
rate announcement and accompanying statement on the state of
the recovery. All 44 forecasters polled by Reuters expect the
Bank of Canada to keep interest rates on hold at 1 percent on
Dec. 7, but analysts differed on whether the next hike would
come in early 2011 or in the second half. [CA/POLL]

“Not since the summer of 2008 have clients been subject to
such divergent opinions … surrounding the likely future path
for the Bank of Canada’s overnight rate,” Scotia Capital
economists Derek Holt and Gorica Djeric said in a note to

The housing market was a driving force of the early phase
of economic recovery but the central bank has long predicted
that trend would not last.

The report on building permits showed residential permits
sank 11.2 percent. Single-family units fell 9.4 percent and
multifamily dwellings slid 13.6 percent from September, with
the two biggest provinces of Ontario and Quebec posting the
largest downturns.

Permits in the nonresidential sector edged up 0.1 percent
as higher commercial and industrial construction offset a
decline in institutional projects.

The overall value of permits was 1.1 percent lower in
October than a year earlier but comparable to prior to the
economic downturn.
(Editing by Jeffrey Hodgson)

WRAPUP 1-Canada Ivey, building data show subdued recovery