TORONTO, Jan. 3, 2012 /CNW/ - Production and new orders both rose
strongly in December, 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 - posted 54.0 in December, up
from 53.3 in November, and signalled a solid improvement in Canadian
manufacturing business conditions. 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 further in December. Firms generally commented on greater
client demand. Concurrently, both new orders and output increased
strongly and at rates faster than registered in November. New export
orders also rose in December, ending a two-month period of decline.
Meanwhile, the rate of input price inflation eased further during the
latest survey period and was at the slowest pace in the 15-month series
"The Canadian manufacturing sector has demonstrated its resilience as
the global economy faces some strong headwinds," said Craig Wright, senior vice-president and chief economist, RBC. "After some temporary
setbacks in 2011, Canada's economy is set to grow by 2.5 per cent in
2012, provided that European policymakers contain the sovereign debt
crisis in that region."
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 December survey include:
Strong increases in both new orders and production
Job creation remains solid
Rate of input price inflation slowest in 15-month series history
Firms partly linked the improvement in business conditions to greater
client demand. Approximately 30 per cent of respondents reported an
increase in new orders, compared with 21 per cent that registered a decrease. Overall, new
order growth was strong and the fastest in three months. Incoming new work from abroad also rose in December, in contrast to declines registered in each of
the past two months.
Reflective of larger new order volumes, Canadian manufacturing firms
raised production in December. Output increased strongly, with the rate of growth the
fastest since April. Stocks of finished goods were also depleted, while backlogs were reduced for the third month running.
The amount of inputs bought by monitored companies increased in December, as has been the case
since data collection began in October 2010. Meanwhile, input inventories were depleted for the fourth consecutive month. Anecdotal evidence
attributed higher purchasing activity to larger new order requirements.
Lead times on inputs increased further during the latest survey period.
Panellists suggested that vendors struggled with greater input demand.
Although the latest lengthening of delivery times was solid, it was nonetheless the weakest in the 15-month survey
Employment in Canada's manufacturing sector rose solidly in December.
Approximately 19 per cent of surveyed firms hired additional staff
(while 13 per cent reduced their workforces), and largely linked job
creation to the recent increases in new order volumes.
Canadian manufacturers reported higher input costs in December, with raw materials such as steel and sugar particularly
mentioned as having increased in price. That said, the rate of input
price inflation eased further from April's peak and was the slowest in
the series history. Firms partly passed on larger cost burdens to
clients by raising their selling prices. However, the latest increase in output charges was only marginal and
below the series average.
Regional highlights include:
Regional PMI data indicated that business conditions improved in three
out of four regional manufacturing sectors in December. The only
exception was Quebec, where operating conditions were unchanged from November.
Ontario posted the fastest rate of new order growth, closely followed by Alberta & British Columbia.
Quebec was the only region to register job losses in December.
The fastest rate of input price inflation was registered in Alberta & British Columbia.
"Canadian manufacturing sector business conditions improved further in
December, with both output and new orders increasing strongly. This in
part reflected greater client demand from both domestic and foreign
clients. The rate of input price inflation was also at the slowest pace
in the 15-month series history," said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "Although the overall story from the latest survey is generally
positive, the headline PMI nonetheless ends 2011 at a level below the
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.
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate
under the master brand name RBC. We are one of Canada's largest banks
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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.
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
herein, any errors, inaccuracies, omissions or delays in the data, or
for any actions taken in reliance thereon. In no event shall Markit be
liable for any special, incidental, or consequential damages, arising
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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