TORONTO, June 2, 2014 /CNW/ - Manufacturers in Canada signalled the
slowest improvement in overall business conditions in four months
during May, largely reflecting a further moderation in output growth,
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 Supply Chain
Management Association (SCMA), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian
At 52.2 in May, down from 52.9 in April, the headline RBC PMI remained
above the neutral 50.0 mark, but eased to its lowest level since
January. The index was also weaker than the 53.3 average since the
survey began in late 2010.
"May's reading at 52.2 indicates that Canada's manufacturing sector is
still being held back by sluggish global growth," said Craig Wright, senior vice-president and chief economist, RBC. "As we move forward, support for the sector is expected given easing
economic uncertainty, improving growth prospects in the U.S. and a more
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the May survey include:
Output experienced weakest gain since August 2013
New export order growth slowed
Input cost inflation eased to four-month low
The decline in the headline PMI reading during May was driven by a
moderation in output growth to the slowest pace since August 2013.
Meanwhile, the rate of new order growth across the manufacturing sector
was unchanged from April, but was still the joint-weakest for 13
months. May data also indicated only a marginal pace of new export
order growth. The latest increase in new business from abroad was the
slowest since the current period of expansion began in April 2013.
Relatively subdued gains in incoming new business resulted in a
moderation in capacity pressures across the manufacturing sector. This
was highlighted by the rate of backlog accumulation easing to a
three-month low in May. A slower rise in unfinished business also
reflected ongoing employment growth during the latest survey period.
The latest increase in staffing levels was the most marked since
November 2013. Companies that boosted their staffing levels generally
commented on the launch of new products and optimism about the wider
Slower output growth meanwhile contributed to a weaker increase in input
buying during May. Latest data pointed to only a marginal rise in
purchasing activity, with the pace of expansion easing from the
four-month high registered in April. Manufacturers decreased their
stocks of finished goods for the first time in seven months, while
pre-production inventories also saw a renewed decline in May. Some
companies cited inventory reduction policies in response to subdued new
business growth at their plants.
Supplier lead-times lengthened again in May, but the latest
deterioration in vendor performance was the least marked since January.
Manufacturers that reported longer supplier delivery times generally
cited low stocks at vendors.
May data signalled a further moderation in input cost inflation from the
near three-year high recorded during March. Although still strong, the
pace of input price inflation eased to its lowest in four months.
Higher cost burdens again contributed to a robust increase in output
charges across the manufacturing sector in May.
Regional highlights include:
All four regions recorded an overall improvement in business conditions…
…but Quebec was the only region to register faster output growth than in April
Job creation was also strongest in Quebec
Input cost inflation slowed in May across all four regions monitored by the survey
"The manufacturing sector lost some momentum during May, as a moderation
in new export growth contributed to the slowest rise in output since
last August," said Cheryl Paradowski, president and chief executive officer, SCMA. "That said, the latest survey pointed to resilient job creation at
manufacturing companies, suggesting optimism about the longer-term
business outlook. Manufacturers also indicated an easing of both supply
chain pressures and input cost inflation in May."
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.
Royal Bank of Canada is Canada's largest bank, and one of the largest
banks in the world, based on market capitalization. We are one of North
America's leading diversified financial services companies, and provide
personal and commercial banking, wealth management services, insurance,
investor services and capital markets products and services on a global
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more than $104 million to causes worldwide, including donations and
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sponsorships. Learn more at www.rbc.com/community-sustainability.
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.
Markit is a leading global diversified provider of financial information
services. We provide products that enhance transparency, reduce risk
and improve operational efficiency. Our customers include banks, hedge
funds, asset managers, central banks, regulators, auditors, fund
administrators and insurance companies. Founded in 2003, we employ over
3,000 people in 11 countries. For more information, please 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 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
licence. Markit is a registered trade mark of Markit Group Limited.
Image with caption: "RBC Canadian Manufacturing PMI(TM). Canada's manufacturing sector growth slows in May. (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20140602_C7659_PHOTO_EN_40928.jpg
For further information:
Royal Bank of Canada
Sanam Heidary, Head of Communications, Canada
RBC Capital Markets
Elyse Lalonde, Communications Manager, Canada
RBC Capital Markets
Supply Chain Management Association
Cheryl Paradowski, President and CEO
Amanda Cormier, Acting Director, Public Affairs & Communications
Tim Moore, Senior Economist
Joanna Vickers, Corporate Communications