TORONTO, July 3, 2012 /CNW/ - June saw a further robust improvement in Canadian manufacturing business
conditions, 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 - indicated a further strong
improvement in Canadian manufacturing business conditions in June. At
54.8, up fractionally from 54.7 in May, the RBC PMI recorded the
strongest improvement since September 2011. Moreover, the average PMI
reading for the second quarter as a whole was 54.3, up from 51.6 in the
first three months of 2012.
The RBC PMI found that both output and new orders rose strongly over the
month, with firms generally citing greater client demand. Notably, the
rates of growth strengthened to six- and nine-month highs respectively.
Manufacturing employment increased for the fifth successive month in
June, while the rate of input price inflation slowed sharply to its
weakest pace since data collection began in October 2010.
"The strong performance in the manufacturing sector so far this year has
been led by medium-sized companies - those with 50 to 199 employees,
with more recent improvements also noted for smaller companies," said
Craig Wright, Senior Vice-President and Chief Economist, RBC.
"Conditions across the sector are favourable, and we expect that
continued gains in employment and an uptick in exports will help
contribute to further economic expansion in 2012."
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 June survey include:
The strongest rise in new work intakes since September 2011;
The fourth consecutive month of export demand expansion; and
The slowest rate of input price inflation since data collection began in
Canadian manufacturers received a larger volume of new orders in June, with greater client demand often cited. Approximately 37 per
cent of survey respondents reported an increase in new work intakes
since May, while 18 per cent recorded a decline. Overall, the rate of
new order growth was strong and the fastest since last September. New export orders also increased for the fourth consecutive month, with incoming new work
from the U.S. particularly mentioned by panellists.
Reflective of the increase in new orders, firms raised production during
June. Output has increased in each month since data collection began in October
2010, with the latest rise the strongest since last December. Backlogs of work, meanwhile, fell during the latest survey period, and stocks of finished goods were depleted at the sharpest rate in the 21-month series history.
The quantity of inputs bought by manufacturers increased strongly in June. Input inventories also rose, albeit marginally. Anecdotal evidence attributed the
increase in purchases to larger output requirements. Concurrently, suppliers' delivery times lengthened further, with a number of monitored companies citing
Manufacturing employment in Canada increased for the fifth successive month in June, with one in
every four panellists hiring additional staff since May. Although the
rate of job creation slowed over the month, the latest increase in staff headcounts
nonetheless remained strong overall.
Input costs faced by Canadian manufacturing firms rose further in June.
However, the rate of input price inflation eased sharply to its weakest pace since data collection began
in October 2010. Lower oil prices partly offset the overall rise in
cost burdens in June. Firms passed higher input costs on to clients by
raising their selling prices. Although charges rose modestly during the latest survey period, the
increase was slower than the series average.
Regional highlights include:
Manufacturing business conditions improved in all four Canadian regions
in June. Quebec posted the strongest improvement, continuing the trend that has been
registered in each of the past three months.
The fastest rate of new order growth was reported in Quebec, while the slowest expansion of incoming new work was registered in Alberta & British Columbia.
June data indicated employment growth across all four regions, with the
strongest rise in staffing levels recorded for Quebec.
Lower input prices were reported by manufacturers based in Quebec.
"Canada's manufacturing sector continued to be supported by a strong
increase in new orders in June. New export orders were also up, with a
solid improvement in Canadian export market conditions reported," said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "Manufacturers recorded the weakest increase in input prices since we
started collecting data in October 2010. Lower prices for oil-related
products offset the overall rise in other input costs during the month
Company size analysis
The strong performance of the Canadian manufacturing sector in June was
led by medium-sized companies - firms that have between 50 and 199 employees.
Moreover, the latest improvement in business conditions faced by medium-sized manufacturers was the strongest since April 2011. Overall, medium-sized companies
have led the manufacturing expansion in each month of 2012 so far.
Firms that have less than 49 staff and are deemed to be 'small' also
recorded a strong improvement in manufacturing business conditions in
June. Although the latest improvement was to a lesser extent than in
May, the rate of growth remained above the series average for the third
month running. The strong performance of small manufacturing companies in recent months contrasted with only modest growth between October
2011 and March 2012 (including a slight deterioration in January).
Large manufacturing firms that employ more than 200 employees were the worst performing
company-size group in June. Although the PMI rose to a six-month high
and signalled a solid improvement of operating conditions faced by
large manufacturers, the index remained below its series average.
Notably, the weak performance of large manufacturing firms contrasted
with strong growth in the second half of 2011.
The Exporters' Climate Index utilises PMI data from other national
surveys. The Output Index for each country covered by PMI data is
weighted based on official Canadian exports to that country and summed
to produce a single index reading which suggests an overall improvement
or deterioration in Canada's export market as a whole.
The Exporters' Climate Index posted above the 50.0 no-change mark in May (the latest month for which
data are available), indicating an improvement in Canadian export
market conditions. An improvement in Canada's export market has been
recorded in each month since the series first started in October 2010.
At 54.6, the index signalled a solid improvement in Canadian export
market conditions over the month. However, down from 54.8 in April, the
index was at a six-month low and below the series average of 56.7.
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 Canada's largest bank as
measured by assets and market capitalization, and are among the largest
banks in the world, based on market capitalization. We are one of North
America's leading diversified financial services companies, and provide
personal and commercial banking, wealth management services, insurance,
corporate and investment banking and transaction processing services on
a global basis. We employ approximately 74,000 full- and part-time
employees who serve more than 15 million personal, business, public
sector and institutional clients through offices in Canada, the U.S.
and 51 other countries. For more information, please visit rbc.com.
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.
For further information:
Royal Bank of Canada
Gillian McArdle, Head of Communications, Canada
RBC Capital Markets
Elyse Lalonde, Communications Manager, Canada
RBC Capital Markets
Purchasing Management Association of Canada
Cheryl Paradowski, President and CEO
Cori Ferguson, Director, Public Affairs & Communications
Mark Wingham, Economist
Rachel Harling, Corporate Communications
Telephone +001-917-441-6345 / +001-646-351-3584