TORONTO, June 1, 2012 /CNW/ - Canadian manufacturing business conditions
improved to the greatest extent in eight months during May, 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 - signalled a strong improvement
in Canadian manufacturing business conditions during May. At 54.7, up
from 53.3 in April, the RBC PMI recorded the strongest monthly
improvement since September 2011 and slightly above the historical
average for the series (54.3).
The RBC PMI found that both output and new orders increased further in
May, with firms generally citing greater client demand. Moreover, the
rates of expansion were strong and the fastest in 2012 to date.
Manufacturing employment increased for the fourth consecutive month in
May, while the rates of input and output price inflation both slowed
from those recorded in April.
"The Canadian manufacturing sector has proven to be quite resilient over
the past several months against a backdrop of market uncertainty and
softening conditions in many other parts of the world. Employment gains
across the sector have been particularly strong since the beginning of
the year, with the overall rate of job creation rising at the fastest pace since
September 2011," said Craig Wright, senior vice-president and chief economist, RBC. "Manufacturing plays
an important role in the country's economic growth and we expect
Canada's GDP to grow by 2.6 per cent 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 May survey include:
RBC PMI signals strongest improvement in Canadian manufacturing business
conditions since last September
Greater demand supports robust rise in incoming new work
Job creation sustained for fourth month running
Canadian manufacturers generally attributed the improvement in business
conditions to greater client demand. Incoming new work rose further during May, with approximately 37 per cent of firms
reporting an increase compared with April. New export orders also rose, with higher demand from the U.S. and Asia particularly
mentioned by panellists. Overall, total new work intakes increased
strongly in May, with the rate of growth the strongest in 2012 to date.
Reflective of the increase in new orders, firms stepped up production in May. Output rose solidly over the month, with the latest expansion
stronger than the series average. Stocks of finished goods were depleted slightly to fulfill some new order requirements; however,
backlogs of work increased in May, albeit only marginally.
The quantity of inputs bought by monitored companies increased further during the latest
survey period. Panellists attributed the rise in purchases to greater
production requirements. Firms held some of their purchases as stock,
with input inventories rising solidly and at the strongest rate in the 20-month series history.
Meanwhile, suppliers' delivery times lengthened further in May, but to a lesser extent than in April.
Manufacturing employment in Canada rose for the fourth consecutive month in May, with almost 27
per cent of firms hiring additional staff since April. Overall, the
rate of job creation was strong and the fastest since September 2011.
Companies reported that higher raw material prices and unfavourable
exchange rates both contributed to larger cost burdens in May. The rate
of input price inflation remained marked, despite having eased since April. Panellists
passed parts of the increase in costs to clients by raising their selling prices. However, output charges rose only modestly during the latest survey
period, and at a rate weaker than the series average.
Regional highlights include:
Manufacturing business conditions improved in all four Canadian regions
in May. The strongest monthly improvement was reported in Quebec, as was the case in April.
Quebec posted the fastest rate of new order growth, while the slowest
expansion in new work intakes was recorded in Alberta & British Columbia.
Job creation was registered in all four regions during May, with the
strongest rise in staffing levels registered in Quebec.
The fastest rate of input price inflation was recorded in Ontario.
"Canadian manufacturing business conditions improved to the greatest
extent since September 2011, with growth of output and new orders both
at five-month highs. Firms also reported a strong increase in new
export orders, with the latest expansion the fastest since March 2011,
as Canada benefitted somewhat from stronger demand in both the U.S. and
Asia," said Cheryl Paradowski, President and Chief Executive Officer, PMAC. "Input costs increased markedly in May, despite the rate of inflation
having slowed from April. Panellists particularly mentioned metals,
woods and fuel as having increased in price over the month."
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 email@example.com.
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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
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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
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 +44-20-7264-6283 / +44-782-7891-072