Canada's seasonally adjusted Ivey purchasing managers' index rose to 62.3 in May from 58.2 in April. Analysts had expected the index to decline to 55.5.
A reading above 50 indicates a rise in the pace of activity, below 50 indicates a contraction in the pace of activity.
The increase was driven by a rise in employment and inventory levels. The employment index was up to 51.8 in May from 50.3 in April, while inventories index rose to 59.5 from 53.2.