TORONTO, Nov. 1, 2011 /CNW/ - Both output and new orders continued to increase solidly in October,
albeit at slower rates, 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 RBC PMI found that Canadian manufacturing business conditions
improved further in October, with firms generally attributing higher
output and new orders to greater demand and new client wins.
Nevertheless, the respective rates of growth eased since September, as
global economic conditions weakened. Notably, new export orders fell
modestly during the latest survey period.
The headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - posted 53.7 in October, which
is down from 55.0 in September and marks a three-month low. Index
readings above 50.0 signal expansion from the previous month, readings
below 50.0 indicate contraction.
"The Canadian manufacturing sector has been weathering external macro
events and market conditions reasonably well, and we expect to see
modest economic growth for the remainder of the year," said Craig Wright, senior vice-president and chief economist, RBC. "It is encouraging to
see the RBC PMI holding its ground, particularly in light of softening
manufacturing conditions in other corners of the globe."
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 October survey include:
Incoming new work and production both increase solidly, albeit at a
Rate of job creation eases since September
Inflationary pressures weaken further
Firms generally linked the improvement in business conditions to new
order growth in October. Incoming new work rose solidly, with almost 30
per cent of monitored companies registering larger new order volumes compared with September. Anecdotal evidence provided by
panellists largely attributed the increase to greater demand and new
client wins. Nonetheless, the rate of growth was the weakest since
July, as new export orders fell modestly in October.
Canadian manufacturers raised production during the latest survey period, as has been the case since the start
of data collection in October 2010. Output increased robustly, but at a
slower pace than in September. Backlogs of work fell modestly in October, meanwhile. Stocks of finished goods were reduced further, in some cases to meet higher new order
Reflective of higher output levels, the amount of inputs purchased in October increased. Surveyed firms also depleted input inventories for the second successive month, with a number of respondents citing
leaner stock holding policies. Subsequently, suppliers' delivery times
lengthened further in October, as input demand strengthened. That said,
the latest increase in lead times was the weakest in the 13-month series history.
Employment in Canada's manufacturing sector rose further during the latest survey
period. Approximately 22 per cent of survey respondents raised staffing
levels, while 14 per cent reduced headcounts. Overall, the rate of job
creation was solid, but slower than that registered in September.
Higher input costs were recorded by Canadian manufacturing companies in October. Fuel and
raw materials such as metals were particularly mentioned as having
increased in price. Although the rate of input price inflation remained
solid, it continued to ease sharply from April's peak. Firms generally
passed on greater cost burdens to clients by raising their selling
prices. Output charges rose only modestly, however.
Regional highlights include:
Regional PMI data signalled improvement in manufacturing business
conditions across all four broad Canadian regions in October. Alberta & British Columbia continued to lead the latest expansion.
Moreover, Alberta & British Columbia registered the fastest rate of new order growth.
Three out of the four broad regions reported job creation in October.
The only exception was Quebec.
The fastest rate of input price inflation was recorded in Alberta & British Columbia.
"The Canadian manufacturing sector continued to grow solidly in October,
albeit at a weaker pace" said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "The volume of new work intakes received by Canadian manufacturers rose
at the slowest rate in three months, with a fall in new export orders
being a key contributor. Although both output and employment growth
also eased during October, the rate of input price inflation slowed
further from April's peak, thus alleviating some pressure on
manufacturers' cost burdens."
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
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.
For further information:
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