The seasonally adjusted index fell to 46.7 from 52.7 in November. It was the first time since May that the PMI was below the 50 threshold, indicating a decrease in activity.
The Ivey PMI measures the month-to-month variation in economic activity as indicated by a panel of purchasing managers in the public and private sectors across Canada.
The country is in the middle of a second wave of the coronavirus pandemic, with some provinces increasing economic restrictions in recent weeks to help contain the virus.
The gauge of employment fell to an adjusted 45.8 from 48.1 in November, while the supplier deliveries index slipped to 30.1, its lowest since April, from 34.3.
The unadjusted PMI rose to 53.9 from 52.4.
(Reporting by Fergal Smith; Editing by Paul Simao)
