TORONTO, Oct 4 (Reuters) - Canadian economic activity

rebounded in September after contracting in the prior month as

the pace of price increases cooled to its slowest in six months,

Ivey Purchasing Managers Index (PMI) data showed on Friday.

The seasonally adjusted index rose to 53.1 from 48.2 in

August. A reading above 50 indicates an increase in activity.

August's reading was the first move below the 50 no-change

threshold in 13 months.

The Ivey PMI measures the month to month variation in

economic activity as indicated by a panel of purchasing managers

from across Canada.

The gauge of employment fell to an adjusted 51.6 from 54.7

in August, while the prices index was at 58.2, its lowest level

since March, down from 63.4.

The unadjusted PMI rose to 54.5 from 50.3.