By Fergal Smith
TORONTO, Oct 4 (Reuters) - Purchasing activity in Canada expanded in September at its slowest pace in more than two years as a measure of employment tumbled, according to Ivey Purchasing Managers Index data released on Thursday.
But economists cautioned that the data tends to swing rapidly and could have been buffeted by an uncertain outlook for the North American Free Trade Agreement (NAFTA). An agreement to revamp NAFTA was reached over the weekend. seasonally adjusted index fell to 50.4 last month, its lowest since May 2016, from 61.9 in August. That left the index only slightly above the 50 threshold that indicates an increase in the pace of activity.
"It is a highly volatile series," said Royce Mendes, a senior economist at CIBC Capital Markets.
It would take a few weaker PMI data points "before we could make any concrete assessment" that growth is slowing in the sector, Mendes said.
The unadjusted index fell to 56.5 from 61.3, which was the lowest since January.
"Concerns over the stalled NAFTA talks through September were likely a factor in the pullback in the Ivey," said Ryan Brecht, senior economist at North America for Action Economics. "We expect a recovery in this volatile index during October."
The gauge of employment dropped to an adjusted 51.6, its lowest level since May 2017, from 59.6. The inventories index fell to 51.8 from 53.0.
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