TORONTO, Feb. 1, 2012 /CNW/ - Production and new orders increased only
modestly in January, according to the RBC Canadian Manufacturing Purchasing Managers Index™ (RBC PMI™), a monthly survey, conducted in association with Markit, a leading
global financial information services company, and the Purchasing
Management Association of Canada (PMAC), which offers a comprehensive
and early indicator of trends in the Canadian manufacturing sector.
The headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - registered 50.6 in January,
down sharply from 54.0 in December, and indicated the weakest
improvement in Canadian manufacturing business conditions since data
collection began in October 2010. Index readings above 50.0 signal
expansion from the previous month; readings below 50.0 indicate
The RBC PMI found that Canadian manufacturing business conditions
improved in January, with firms reporting further output and new order
growth. However, both rates of expansion were only modest and the
weakest since data collection began. Concurrently, employment fell for
the first time in the survey history, while the rate of input price
inflation strengthened to a five-month high.
"Global economic uncertainly, particularly rooted in the euro zone,
weighed heavily on the Canadian manufacturing sector in the first month
of 2012," said Craig Wright, senior vice-president and chief economist, RBC. "Canada's modest
recovery may be jeopardized if European policymakers fail to contain
the sovereign debt crisis."
In addition to the headline RBC PMI, the survey also tracks changes in output, new orders, employment,
inventories, prices and supplier delivery times.
Key findings from the January survey include:
Modest rise in total new orders, as new work from abroad falls solidly
Net job losses for first time since data collection began in October
PMI signals weakest improvement in business conditions in survey history
Monitored companies partly attributed the improvement in business
conditions to greater client demand. New orders received by Canadian manufacturers increased further in January, but
growth was only modest and notably slower than that registered in
December. In contrast, new work intakes from abroad fell solidly during
the latest survey period, with almost one-fifth of respondents
reporting lower volumes of new export orders.
Reflective of the rise in total new orders, Canadian manufacturers
raised production and depleted stocks of finished goods in January. However, output growth was only modest and the weakest in
the 16-month survey history. Backlogs declined for the fourth consecutive month, with a number of panellists
citing the completion of large projects and weak growth of incoming new
Firms purchased a greater amount of inputs during the latest survey
period, as has been the case since the series started in October 2010.
However, the latest rise in input buying was only marginal. Stocks of purchases meanwhile were depleted for the
fifth month running in January. Anecdotal evidence linked the fall in input inventories to leaner stock holding policies. Suppliers' delivery times continued to lengthen in January, but the latest increase in lead times
was slightly weaker than that reported in December.
Employment in Canada's manufacturing sector fell for the first time in the
16-month series history during the latest survey period. Approximately
17 per cent of firms reduced their workforces (while 14 per cent hired
additional staff), and generally attributed job losses to the slower
rate of new order growth.
Input costs rose further in January, with panellists reporting price
increases across a wide variety of goods. Notably, the rate of input price inflation was strong and the fastest since last August. Firms partly
passed on greater cost burdens to clients by raising their output
charges. Although the rate of output price inflation quickened since December, it remained slower than its series
Regional highlights include:
Regional PMI data indicated that manufacturing business conditions
improved in Alberta & British Columbia and Ontario during January.
Firms in Quebec recorded a fall in new order volumes.
Employment growth was only reported in Alberta & British Columbia.
The rates of input price inflation quickened in all four regions in
January. The strongest increase was posted in Alberta & British Columbia.
"Growth in the Canadian manufacturing sector slowed sharply in January,
with both output and new orders increasing at the slowest rates in the
survey's history. The latter partly reflected weakness in the global
economy, as new export orders fell solidly from a month earlier," said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "Meanwhile, Canadian manufacturers reported a sharp rise in input costs
at the beginning of 2012, even after adjusting for annual price
increases. Raw materials such as metals and resins were highlighted as
having increased in cost."
The report is available at www.rbc.com/newsroom/pmi
Notes to Editors:
The RBC Canadian Manufacturing PMI™ Report is based on data compiled from monthly replies to questionnaires
sent to purchasing executives in over 400 industrial companies. The
panel is stratified geographically and by Standard Industrial
Classification (SIC) group, based on industry contribution to Canadian
Survey responses reflect the change, if any, in the current month
compared to the previous month based on data collected mid-month. For
each of the indicators the 'Report' shows the percentage reporting each
response, the net difference between the number of higher/better
responses and lower/worse responses, and the 'diffusion' index. This
index is the sum of the positive responses plus a half of those
responding 'the same'.
Diffusion indexes have the properties of leading indicators and are
convenient summary measures showing the prevailing direction of change.
An index reading above 50 indicates an overall increase in that
variable, below 50 an overall decrease.
The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) is a composite index based on five of the individual indexes with the
following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2,
Suppliers' Delivery Times - 0.15, Stock of Items Purchased - 0.1, with
the Delivery Times Index inverted so that it moves in a comparable
The Purchasing Managers' Index (PMI) survey methodology has developed an outstanding reputation for
providing the most up-to-date possible indication of what is really
happening in the private sector economy by tracking variables such as
sales, employment, inventories and prices. The indices are widely used
by businesses, governments and economic analysts in financial
institutions to help better understand business conditions and guide
corporate and investment strategy. In particular, central banks in many
countries (including the European Central Bank) use the data to help
make interest rate decisions. PMI surveys are the first indicators of
economic conditions published each month and are therefore available
well ahead of comparable data produced by government bodies.
Markit do not revise underlying survey data after first publication, but
seasonal adjustment factors may be revised from time to time as
appropriate which will affect the seasonally adjusted data series.
Historical data relating to the underlying (unadjusted) numbers, first
published seasonally adjusted series and subsequently revised data are
available to subscribers from Markit. Please contact firstname.lastname@example.org.
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About Purchasing Management Association of Canada
The Purchasing Management Association of Canada (PMAC) is the leading,
and the largest, association in Canada for supply chain management
professionals. With 7,000 members working across private and public
sectors, PMAC is the principal source of supply chain training,
education and professional development in the country, requiring all
members to adhere to a Code of Ethics. Through its 10 Provincial and
Territorial Institutes, PMAC grants the SCMP (Supply Chain Management
Professional) designation, the highest achievement in the field and the
mark of strategic leadership. For more information please see www.pmac.ca.
Markit is a leading, global financial information services company with
over 2,300 employees. The company provides independent data, valuations
and trade processing across all asset classes in order to enhance
transparency, reduce risk and improve operational efficiency. Its
client base includes the most significant institutional participants in
the financial marketplace. For more information, see www.markit.com.
Purchasing Managers' Index™ (PMI™) surveys are now available for 32 countries and also for key regions
including the Eurozone. They are the most closely-watched business
surveys in the world, favoured by central banks, financial markets and
business decision makers for their ability to provide up-to-date,
accurate and often unique monthly indicators of economic trends. To
learn more go to www.markit.com/economics.
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provided herein is owned by Markit Economics Limited. Any unauthorised
use, including but not limited to copying, distributing, transmitting
or otherwise of any data appearing is not permitted without Markit's
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For further information:
| Royal Bank of Canada |
| Rina Cortese, Director, Media Relations |
| Gillian McArdle, Head of Communications, Canada |
RBC Capital Markets
| Purchasing Management Association of Canada |
| Cheryl Paradowski, President and CEO |
| Cori Ferguson, Director, Public Affairs & Communications |
| Markit |
| Mark Wingham, Economist |
| Rachel Harling, Corporate Communications |
Telephone +44-20-7264-6283 / +44-782-7891-072