TORONTO, April 1, 2015 /CNW/ - The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) indicated a further downturn in business conditions across the Canadian
manufacturing sector in March, though the rate of contraction moderated
from the survey-record-low in February. Output, new business and
employment levels all fell at slower rates than in the previous month.
Manufacturers, nonetheless, signalled a solid reduction in work-in-hand
(but not yet completed), and inventory levels were reduced again amid
concerns about the outlook for client demand.
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 48.9 in March, up fractionally from 48.7 in February, the seasonally
adjusted RBC Canadian Manufacturing PMI posted below the neutral 50.0 value for the second month running. This
represents the first back-to-back deterioration in overall business
conditions in the survey's four-and-a-half year history. Moreover, the
average reading for Q1 as a whole (49.5) is the weakest since the
survey began in late-2010.
"With a second consecutive reading below 50, the RBC PMI is signalling
that Canada's manufacturing sector continues to face headwinds," said Craig Wright, senior vice-president and chief economist, RBC. "We remain confident that as the U.S. economy continues to strengthen
and the Canadian dollar becomes more competitive, there will be an
uptick in exports, a good sign for manufacturers - we need some time to
see this materialize."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the March survey include:
Manufacturing PMI picked up slightly from February's survey-record
...helped by slower declines in output and new orders
Staffing levels decreased for the third month running
Survey respondents suggested that falling capital spending among clients
in the energy sector remained the key factor weighing on new business
intakes in March. That said, the latest overall decline in incoming new
work was only modest and less marked than that seen in the previous
month. Export sales also fell at a slower pace than in February, with
some firms commenting on support from exchange rate depreciation and
stronger demand from clients in the U.S.
A moderate drop in overall new orders resulted in another decrease in
manufacturing production in March. Moreover, the latest survey
suggested a lack of pressure on operating capacity, as highlighted by a
reduction in backlogs of work for the fourth consecutive month.
Reduced production schedules and falling workloads contributed to more
cautious staff hiring patterns in March. Latest data signalled that
payroll numbers decreased for the third month running, although the
rate of job shedding moderated from February's survey-record pace.
A number of manufacturers pointed to deliberate stock reduction policies
at their plants in response to the uncertain business outlook.
Pre-production inventories decreased at the fastest rate since November
2010, while stocks of finished goods were depleted at the most marked
pace in just under three years.
Volumes of input buying fell for the second month running in March,
reflecting efforts to prevent inventory accumulation across the
manufacturing sector. This helped alleviate supply chain pressures in
March, with the latest lengthening of vendor lead times the least
marked since August 2013.
Average cost burdens increased at a robust pace in March, which survey
respondents overwhelmingly attributed to exchange rate depreciation and
a corresponding rise in imported raw material costs. That said, the
overall rate of input cost inflation moderated since February, while
factory gate charges also rose at a weaker pace.
Regional highlights include:
Ontario continued to buck the overall deterioration in manufacturing
sector business conditions
Alberta & British Columbia posted a fresh survey-record downturn in
A sharp drop in manufacturing employment in Alberta & British Columbia
contrasted with job creation elsewhere
"Lower energy sector investment spending continues to weigh on the
Canadian manufacturing sector" said Cheryl Paradowski, president and chief executive officer, SCMA. "In response to the weaker demand environment, manufacturers are
exercising caution in terms of job hiring and inventory levels.
However, the speed of the downturn moderated in March, and regional
data indicated that the latest reduction in export sales was largely
confined to Alberta & British Columbia. As a result, despite a further
drop in overall workloads, there are some early signs that the benefits
of a weaker exchange rate are starting to feed through to the
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
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 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
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Image with caption: "RBC Canadian Manufacturing PMI(TM) (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20150401_C9050_PHOTO_EN_43414.jpg
For further information:
Royal Bank of Canada
Christine Stewart, Senior 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