TORONTO, Sept. 4, 2012 /CNW/ - Canada's manufacturing sector grew in
August, although at its weakest pace in five months, 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), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian
The headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - indicated a solid improvement
in Canadian manufacturing business conditions in August. However,
having fallen slightly from 53.1 in July to 53.0, the PMI remained
below the series average of 54.2 and signalled the weakest
manufacturing expansion in five months.
The RBC PMI indicated further increases in both output and new orders in August.
However, the rate of output growth was unchanged from July's four-month
low, while the expansion for new orders remained below the series
average. Employment also increased over the month, but the rate of job
creation slowed slightly to its weakest since April. Input prices
meanwhile increased in August, reversing the marginal decline in July.
"In contrast to declining manufacturing conditions around the world,
particularly in the U.S., Euro area and China, the Canadian
manufacturing sector is continuing to grow, albeit at a moderately
slower pace," said Craig Wright, senior vice-president and chief economist, RBC. "It is encouraging to
see that new export orders rebounded and manufacturing firms reported
that they continued to hire employees in August, which may provide a
favourable early indication in advance of the broader Canadian
employment report due out on Friday."
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 August survey include:
growth of output unchanged from July's four-month low;
new orders increase solidly, partly reflecting an uptick in new export
input prices rise solidly, reversing marginal decline recorded one month
The volume of new orders received by Canadian manufacturers increased in August, with firms
generally linking this to greater client demand. New export orders also rose over the month, with an increase in new work from the U.S.
particularly mentioned by panellists. Overall, total new orders rose
solidly from July, although the rate of growth remained slower than the
Reflective of the rise in new work intakes, manufacturers across Canada
raised their production levels in August. Output has risen in each month since data collection
began in October 2010, but the rate of increase was unchanged from the
four-month low recorded in July. Firms also depleted stocks of finished goods, albeit to a lesser extent than one month previously, and reduced the
level of outstanding business for the third month running.
The amount of inputs bought by surveyed companies increased in August,
with firms largely linking the rise in purchases to greater output requirements. Input inventories also rose over the month; however, the rate of stock accumulation was
only slight overall. Concurrently, suppliers' delivery times lengthened further during the latest survey period. However, the
increase in input lead times was only marginal and the weakest in the
23-month series history.
Manufacturing employment in Canada increased for the seventh consecutive month in August, with
approximately 18 per cent of firms hiring additional staff compared to
July. Panellists generally attributed this to recent increases in new
orders. Although remaining solid overall, the rate of job creation
nonetheless slowed to its weakest since April.
In contrast to the marginal reduction recorded in July, input costs faced by Canadian manufacturers increased in August. Increased prices
for fuel, wood and steel were all particularly mentioned by
respondents. Overall, the rate of inflation was the strongest in three
months. Firms partially passed on the increase in cost burdens to
clients by raising their output charges. However, selling prices rose only modestly, despite the rate of
increase hitting a four-month high.
Regional highlights include:
Alberta & British Columbia and Quebec saw weaker manufacturing expansions in August.
All four regions posted increases in new orders; however, the slowest
rate of growth was reported by firms operating in Ontario.
Ontario posted the weakest rise in employee headcounts during August.
Alberta & British Columbia posted the strongest rate of input price inflation in August.
"Although the Canadian manufacturing sector grew at its weakest pace
since March, the slowdown was less severe than in July and the pace of
expansion remained solid overall," said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "An uptick in new export orders, reflecting greater demand from the
U.S., contributed to a faster expansion in total new orders in August.
However, the increase in new work did not translate into a stronger
rise in production, with output growing at the same rate as in July."
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 does 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 email@example.com.
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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
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for any actions taken in reliance thereon. In no event shall Markit be
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Image with caption: "RBC Canadian Manufacturing PMI™ - Slightly weaker expansion of manufacturing sector in August (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20120904_C3225_PHOTO_EN_17429.jpg
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