TORONTO, July 2, 2015 /CNW/ - The RBC PMI data for June pointed to a modest recovery in business conditions across
the Canadian manufacturing sector. Production volumes, new business
intakes and employment numbers all picked up compared to May. A number
of firms noted that stronger export demand helped drive the upturn in
business conditions, as highlighted by the fastest rise in new work
from abroad since November 2014.
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 registered 51.3 in June, up from 49.8 in May and above the neutral 50.0
value for the first time in five months. That said, the headline index
pointed to only a marginal pace of improvement and the latest reading
was still below the average since the survey began in late-2010 (53.0).
"The RBC PMI returned to positive growth territory during June,
reflecting the lift to Canada's manufacturers provided by an improved
U.S. economy and a more competitive Canadian dollar," said Craig Wright, senior vice-president and chief economist, RBC. "As we move through the summer months, we expect a trend improvement
in the level of activity in the manufacturing sector."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the June survey included:
Output growth accelerated at its fastest pace so far in 2015
New business volumes increased for the first time since January
Strongest upturn in new export sales in seven months
Production levels expanded for the second month running in June, and the
latest increase was the fastest since December 2014. Survey respondents
noted that stronger client demand and, in some cases, reduced caution
in terms of finished goods inventories had contributed to increased
production schedules in June.
New order volumes picked up slightly in June, thereby ending a
four-month period of continuous reductions. Anecdotal evidence
suggested that stronger export sales were the key driver of the overall
upturn in new work. Highlighting this, the latest survey pointed to the
sharpest rise in new work from abroad for seven months. A number of
manufacturers noted that exchange rate depreciation and improving U.S.
economic conditions had supported new export order volumes in June.
Despite rising levels of incoming new business, the latest survey
pointed to a decline in backlogs of work for the seventh consecutive
month. Manufacturers mostly cited a lack of pressure on operating
capacity. Nonetheless, payroll numbers picked up slightly in June,
which ended a five-month period of sustained job losses across the
manufacturing sector. Staff recruitment was linked to rising new order
levels and, in some cases, improved confidence regarding business
Increased production schedules resulted in a modest rebound in input
buying by manufacturers. Meanwhile, stocks of purchases were depleted
during June, but at a slower pace than in the previous month. Some
firms commented on efforts to improve cash flow. However, there were
also reports that stronger than expected demand had led to lower
pre-production inventories. Meanwhile, suppliers' lead-times lengthened
again in June, which marked two years of worsening vendor performance.
Average cost burdens increased at a robust pace in June, which
manufacturers linked to rising prices for imported raw materials.
However, the overall rate of cost inflation eased to its slowest since
January. Factory gate charges also rose in June, but only at a modest
Regional highlights include:
Most regions recorded an improvement in business conditions, except
Alberta and British Columbia
Alberta and British Columbia recorded slower declines in manufacturing
output and new orders compared to May
New export work increased in Ontario, Quebec and the 'rest of Canada'
Ontario was the best performing region in terms of job creation, with
employment growth the fastest since the series began in late-2010
"Improving export sales and support from exchange rate depreciation
helped to drive the fastest improvement in Canadian manufacturing
business conditions so far in 2015" said Cheryl Paradowski, president and chief executive officer, SCMA. "Output, new orders and employment levels all rebounded in June,
suggesting that manufacturers are starting to experience a turnaround
after the declines seen earlier in the year. Reduced spending across
the energy sector continued to act as a drag on demand, but the latest
survey is an encouraging sign that the manufacturing sector is back in
expansion mode. The rebound in overall workloads should boost business
confidence within the manufacturing sector during the second half of
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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provided herein are owned by or licensed to Markit. Any unauthorised
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Image with caption: "RBC Canadian Manufacturing PMI(TM) - RBC PMI returned to positive territory in June (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20150702_C9054_PHOTO_EN_43950.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