TORONTO, Feb. 2, 2015 /CNW/ - January data indicated a sharp slowdown in
the Canadian manufacturing sector, with overall business conditions
improving at the weakest pace since April 2013, according to the RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™). The latest survey signalled that output and new business volumes grew,
but at much slower rates than in December, while employment numbers
dropped for the first time since the start of 2014. Manufacturers
recorded softer input cost inflation during the latest survey period,
while factory gate charges increased at the slowest pace for almost a
year and a half.
A monthly survey, conducted in association with Markit, a leading global
financial information services company, and the Supply Chain Management
Association (SCMA), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian
At 51.0 in January, down from 53.9 in December, the seasonally adjusted
RBC Canadian Manufacturing PMI signalled only a marginal improvement in
overall business conditions at the start of 2015. Moreover, the
headline index was at its lowest level for 21 months, largely driven by
weaker rates of output and new business growth in January.
"The latest data indicates that Canada's manufacturers started the year
with concerns around uncertainty about global growth prospects,
financial market volatility and a sharp drop in oil prices," said Craig Wright, senior vice president and chief economist, RBC. "As we look ahead, we expect an eventual recovery in oil prices
alongside a strong U.S. economy and a more competitive currency. These
factors will support economic growth similar to the 2 ½ per cent rate
achieved last year and the manufacturing sector offsetting weakness in
the energy sector."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the January survey include:
Output and new business growth both eased sharply
Manufacturing employment fell for the first time in 12 months
Input cost inflation dropped to its lowest since September 2013, despite
a weaker exchange rate
Manufacturing production growth has now moderated for two months
running, with the latest increase in output volumes being the slowest
since May (and the joint-weakest since August 2013). Meanwhile, new
business volumes rose at the least marked rate since April 2013.
Anecdotal evidence from survey respondents, especially investment goods
producers, suggested that softer demand from clients in the oil and gas
sector had weighed on overall new order gains during the month of
January. Moreover, relatively subdued export trends continued during
the latest survey period. New orders from abroad increased fractionally
and at the weakest pace for four months, although some firms noted a
boost to export sales from improving U.S. economic conditions, similar
to responses in previous surveys.
Canadian manufacturers signalled a slight reduction in payroll numbers
during January, which ended an 11-month period of sustained job
creation across the sector. Survey respondents suggested that
uncertainty towards the business outlook and a lack of pressure on
operating capacity had weighed on staff recruitment at the start of the
year. Moreover, latest data pointed to the sharpest fall in backlogs of
work since March 2013.
January data highlighted a further month of cautious inventory policies
across the manufacturing sector. Stocks of finished goods and
pre-production inventories both declined at faster rates than in
December. Meanwhile, input buying among Canadian manufacturing firms
increased at the slowest pace since May 2014.
Input cost inflation moderated for the third time in the past four
months during January. Although the lowest since September 2013, there
were widespread reports that the weakening exchange rate had limited
the decline in cost inflation. Factory gate charges meanwhile increased
only slightly at the start of 2015.
Regional highlights include:
All regions monitored by the survey recorded weaker output trends than
Quebec and Alberta & British Columbia saw the most noticeable reductions
Input cost pressures moderated in all regions at the start of 2015
"Canadian manufacturing firms indicated a disappointing start to the
year, with overall business conditions improving at the slowest pace
for almost two years," said Cheryl Paradowski, president and chief executive officer, SCMA. "There were some reports that weaker demand for investment goods,
especially among clients in the oil and gas sector, had a negative
influence on manufacturing production and job creation in January."
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 Supply Chain Management Association
As the leading and largest association in Canada for supply chain
management professionals, the Supply Chain Management Association
(SCMA) is the national voice for advancing and promoting the
profession. SCMA sets the standard of excellence for professional
skills, knowledge and integrity and was the first supply chain
association in the world to require that all members adhere to a Code
With nearly 8000 members working across the private and public sectors,
SCMA is the principal source of supply chain training, education and
professional development in the country. Through its 10 Provincial and
Territorial Institutes, SCMA grants the Supply Chain Management
Professional (SCMP) designation, the highest achievement in the field
and the mark of strategic supply chain leadership.
SCMA was formed in 2013 through the amalgamation of the Purchasing
Management Association of Canada and Supply Chain and Logistics
Association of Canada. With a combined history of more than 140 years,
today the association embraces all aspects of strategic supply chain
management, including: purchasing/procurement, strategic sourcing,
contract management, materials/inventory management, and logistics and
transportation. For more information, please visit scmanational.ca.
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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
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business decision makers for their ability to provide up-to-date,
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learn more go to markit.com/economics.
The intellectual property rights to the RBC Canadian Manufacturing PMI
provided herein are owned by or licensed to 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 either registered trade marks of Markit Economics Limited or are
licensed to Markit Economics Limited. RBC uses the above marks under
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Image with caption: "RBC PMI drops to its lowest level in nearly two years in January (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20150202_C9604_PHOTO_EN_43356.jpg
For further information:
Royal Bank of Canada
Elyse Lalonde, Manager, Corporate Communications, Canada RBC Capital Markets
Supply Chain Management Association
Cheryl Paradowski, President and CEO
Amanda Cormier, Director, Public Affairs & Communications
Tim Moore, Senior Economist
Joanna Vickers, Corporate Communications