TORONTO, Sept. 1, 2011 /CNW/ - Incoming new work at Canadian
manufacturers increased at a marked pace during August, according to
the RBC Canadian Manufacturing Purchasing Managers Index™ (RBC PMI™), a newly launched 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
The RBC PMI found that business conditions in the Canadian manufacturing
sector improved further in August. This was supported by stronger
increases in both output and new orders. Panellists attributed growth
of new work to greater demand and new client wins. Subsequently, firms
employed additional staff to cope with the increase in workloads.
Meanwhile, price pressures eased in August, with both input costs and
output charges rising at slower rates.
At 54.9, up from 53.1 in July, the headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - signalled a solid improvement
in overall business conditions within the Canadian manufacturing sector
in August. The index reading was the highest in four months, as both
output and new order levels grew at sharper rates during the latest
"The Canadian manufacturing sector is showing renewed strength in
August, as increases in new work and production levels also boosted
employment," said Paul Ferley, Assistant Chief Economist, RBC. "Today's report supports the view that
the supply chain problems in manufacturing which arose from the natural
disasters that hit Japan in March have started to reverse. This augurs
well for a rebound in manufacturing activity over the second half of
In addition to the headline RBC PMI, the survey also tracks changes in output, new orders, employment,
inventories, prices and supplier delivery times. Index readings above
50.0 signal expansion from the previous month, readings below 50.0
Key findings from the August survey include:
Incoming new work increases at fastest rate since April
Firms further boost production levels
Rate of input price inflation eases to eight-month low
The latest expansion in the Canadian manufacturing sector partly
reflected firms receiving a larger volume of new orders in August. Firms cited greater demand for their goods, as well as new
client wins. Notably, the rate of expansion was the fastest in four
months. Incoming new orders from abroad also increased, with a number
of monitored companies highlighting the US as a key source of new export order growth.
In light of higher new order requirements, firms stepped up production in August. Moreover, survey respondents also fulfilled some new orders
by depleting their stocks of finished goods for the second consecutive month.
The amount of inputs bought by firms increased during the latest survey period. Stocks of purchases also rose, albeit only marginally. Meanwhile, the average time it took
for suppliers to deliver inputs to Canadian manufacturers lengthened
further in August. The latest deterioration in vendor performance was
marked and the strongest since May. Anecdotal evidence provided by
respondents suggested that delivery delays were frequently the result of backlogs at suppliers.
Employment in the Canadian manufacturing sector increased during August. Notably,
the rate of growth was the fastest in three months. Almost 22 per cent
of surveyed firms hired additional staff, while 9 per cent reported job
losses. Job creation was generally linked to greater production
Manufacturing companies based in Canada recorded higher input costs in August. Raw materials such as metals and petroleum-based items were
particularly mentioned by respondents as increasing in price.
Nevertheless, the rate of input cost inflation eased since the previous
survey period, and was the weakest in 2011 so far. Panellists passed on
greater cost burdens to clients by raising their output charges in August. Factory gate prices rose solidly, albeit at the slowest rate
since November 2010 and at a weaker pace than that registered for input
Regional highlights include:
Regional PMI data signalled that all four broad Canadian regions
registered an improvement in overall manufacturing conditions in
August. The expansions were stronger than those recorded in July.
Similarly, all four broad regions reported new order growth. Quebec, however, posted the weakest rise in new work intakes.
Quebec was the only region to register job losses in August.
The fastest rate of input cost inflation was recorded in Ontario. Subsequently, manufacturing companies based in that region raised
their factory gate prices to the greatest extent.
"Canadian manufacturers received a larger volume of new work in August,
with export orders recovering further from the dip recorded in June,"
said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "The overall increase in new orders largely reflected greater demand and
new client wins, and contributed to faster production growth.
Meanwhile, panellists also recorded higher input prices, driven by
increased costs for certain raw materials. That said, the rate of input
price inflation has eased since July to the weakest in 2011 so far."
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 2,200 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.
The intellectual property rights to the RBC Canadian Manufacturing PMI
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
prior consent. Markit shall not have any liability, duty or obligation
for or relating to the content or information ("data") contained
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for any actions taken in reliance thereon. In no event shall Markit be
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out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, RBC uses the above marks
under licence. Markit and the Markit logo are registered trade marks of
Markit Group Limited.
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