TORONTO, March 2, 2015 /CNW/ - The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) indicated a modest reduction in production levels during February, which
ended a 21-month period of sustained expansion. The latest survey also
highlighted falling volumes of incoming new work and employment numbers
across the sector. Softer demand patterns also contributed to more
cautious inventory policies and lower input buying in February.
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
Adjusted for seasonal influences, the RBC Canadian Manufacturing PMI dropped from 51.0 in January to 48.7 in February, to signal a moderate
deterioration in overall business conditions across the manufacturing
sector. The headline index was below the neutral 50.0 threshold for the
first time in almost two years, with the latest reading also the lowest
since the survey began in October 2010.
"February's data reflects the hit to confidence from the oil price shock
with the weakness most evident in the energy intensive regions of the
country," said Craig Wright, senior vice-president and chief economist, RBC. "Over time we expect the weaker Canadian dollar and stronger U.S.
economy to turn sentiment higher."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the February survey include:
Manufacturing PMI was at lowest level in almost four-and-a-half years
Output, new orders and employment all decreased in February
A weaker exchange rate led to robust and accelerated input cost
February data indicated a decline in manufacturing output levels for the
first time since April 2013. Anecdotal evidence suggested that weaker
client spending patterns had contributed to lower production volumes
during the latest survey period. A number of manufacturers, especially
intermediate and investment goods producers, cited lower demand from
clients in the oil and gas sector.
Volumes of new work received by manufacturers in Canada decreased at a
moderate pace in February, thereby ending a 22-month period of
continuous expansion. Moreover, the reduction in overall new order
levels was the second-fastest since the survey began in October 2010.
New export sales also decreased in February, with the rate of decline
the most marked for three years. Panel members noted that sharp falls
in energy infrastructure spending had weighed on new business volumes
from abroad. However, some manufacturers commented on the positive
influence of exchange rate depreciation and stronger U.S. economic
Lower levels of new work and reduced production volumes contributed to a
fall in manufacturing payroll numbers in February. Staffing levels have
now declined for two months in a row, and the rate of job shedding
accelerated to its fastest pace in almost four-and-a-half years of data
collection. That said, a number of firms noted that payroll numbers had
been lowered through hiring freezes and the non-replacement of
Input buying also decreased at a survey-record pace during February,
although the rate of contraction was only moderate. Nonetheless,
supplier lead-times continued to lengthen, which some firms linked to
disruptions at U.S. West Coast ports.
Average cost burdens rose at a sharp pace in February, with the rate of
inflation accelerating to a five-month peak. Higher input prices were
overwhelmingly linked to the impact of exchange rate depreciation
against the U.S. dollar. Meanwhile, factory gate charges rose only
moderately across the manufacturing sector, but the rate of inflation
picked up from January's recent low.
Regional highlights include:
Alberta & British Columbia registered the steepest deterioration in
Ontario was the strongest performing region, and posted a slight upturn
Alberta & British Columbia signalled the sharpest falls in manufacturing
new orders and employment for all regions by far
"February's survey provides a clear signal that substantial parts of the
Canadian manufacturing sector are struggling in the face of falling
worldwide spending on energy sector projects." said Cheryl Paradowski, president and chief executive officer, SCMA. "Weaker oil-related investment spending resulted in the first overall
drop in new orders for almost two years, with Alberta & British
Columbia the worst performing region in terms of new business inflows
and employment trends. However, looking ahead, the weaker exchange rate
and improving conditions in the U.S. economy should provide an
appreciable tailwind to growth within the Canadian manufacturing
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 firstname.lastname@example.org.
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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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Any unauthorised use, including but not limited to copying,
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Image with caption: "RBC PMI falls to lowest level in survey history during February (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20150302_C9845_PHOTO_EN_43400.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