Canada’s economic activity accelerated in February as the Ivey Purchasing Managers Index (PMI) rose to a five-month high, signaling stronger business conditions across the country. The index increased to 56.6 in February from 50.9 in January, according to data released on Thursday.

A reading above 50 indicates expansion, while a lower reading signals contraction. Therefore, the February figure suggests that Canadian businesses experienced a clear improvement in activity compared with the previous month.

Meanwhile, analysts said stronger inventories contributed to the rise in the PMI reading.

📊 Economic Activity Shows Stronger Expansion

The Ivey PMI tracks month-to-month changes in economic activity based on surveys of purchasing managers across Canada. Consequently, the indicator often provides an early signal of broader economic trends.

The February data showed steady growth in several business indicators, particularly inventory levels. The inventories index climbed to 57.2 from 50.9 in January, reflecting stronger supply accumulation among companies.

At the same time, the unadjusted PMI also improved, rising to 56.3 from 47.0 the previous month. This increase further confirmed the expansion in business activity.

In addition, the survey also showed that the prices index increased to 63.1 in February from 58.5 in January, indicating that businesses experienced higher input costs during the month. Economists often monitor this component closely because rising costs can signal future inflation pressures in the broader economy.

👷 Employment Indicator Shows Slight Weakness

Despite stronger overall activity, the employment component of the survey showed a modest decline. The employment index fell to 49.4 in February, down from 51.1 in January.

Because the index dropped below the 50 threshold, the data suggests hiring slowed slightly during the month. However, economists note that employment figures can fluctuate from month to month.

Meanwhile, businesses continued to report stable demand conditions despite broader global uncertainty.

🌍 Economic Outlook and Market Impact

Purchasing Managers’ Index data often influences investor expectations because it provides an early snapshot of economic momentum.

Therefore, the stronger February reading may support confidence in Canada’s business sector. Investors and policymakers frequently monitor PMI data when evaluating economic growth, monetary policy and market conditions.

At the same time, analysts remain cautious as global economic risks, including energy price volatility and geopolitical tensions, continue to influence financial markets.