TORONTO, June 3, 2013 /CNW/ - Operating conditions in Canada's
manufacturing sector improved at the strongest pace in 11 months in
May, partly reflecting a sharp acceleration in the rate of new order
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 Purchasing
Management Association of Canada (PMAC), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian
The headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - rose to an 11-month high in
May. At 53.2, up sharply from 50.1 in April to a level broadly in line
with the series average, the headline PMI index was above the 50.0
no-change mark that separates growth from contraction and consistent
with a solid improvement in Canadian manufacturing operating
The RBC PMI found that manufacturing output increased for the first time in three
months during May. The solid rise in production levels was supported by
a much faster expansion of new orders, which also contributed towards
the first increase in backlogs of work for eight months and encouraged
firms to hire additional staff. On the price front, input costs rose
modestly in May, with the rate of inflation little-changed from April's
"Following the relatively slow pace of expansion recorded in March and
April, the Canadian manufacturing sector perked up considerably in May,
thanks to renewed vitality in new orders and job creation," said Craig Wright, senior vice-president and Chief Economist, RBC. "As we navigate
through the remainder of 2013, we expect the sector's performance to
improve further, boosting Canadian growth."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the May survey include:
new order growth accelerates sharply to 11-month high;
first increase in output for three months; and
strongest rate of job creation since last August.
The volume of new work received by Canadian manufacturers rose for the second month running in
May. Firms generally reported greater client demand and new contract
wins, as well a further increase in new export order volumes. Overall, the rate of total new order growth accelerated
sharply since April to an 11-month high.
The solid rise in incoming new work contributed to an increase in production during May. Notably, this was the first rise in output in three months,
with the rate of growth faster than the series average.
Concurrently, both the levels of work-in-hand and stocks of finished goods at manufacturing companies increased in the latest survey period.
Although the rate of accumulation was modest, it was the first increase
in backlogs of work for eight months.
The quantity of inputs bought by manufacturers rose for the second month running in May. Meanwhile, stocks of purchases were depleted further, albeit at the weakest pace in the current
seven-month sequence of contraction. A number of companies cited a
preference for leaner inventories in the latest survey period.
Suppliers' delivery times lengthened further in May, partly reflecting raw material shortages at
some vendors. However, the latest increase in lead times was only
modest, with the corresponding index unchanged from April's
joint-survey record high.
Manufacturing employment in Canada increased in May, with approximately 22 percent of firms
hiring additional staff since April. The rate of job creation
strengthened to a nine-month high and was faster than the series
Manufacturers reported higher input costs over the month, with raw materials including wood and metals commonly
recorded as having increased in price. However, the rate of inflation
was only modest and much weaker than the series average. Panellists
passed on greater costs to clients by raising their output charges, but the increase was nonetheless the weakest since last July.
Regional highlights include:
Alberta and British Columbia was the only region to see a deterioration in manufacturing business
conditions in May, but this was only slight and to a lesser extent than
Following reductions in April, output levels in both Alberta and British Columbia and Ontario increased in May.
Manufacturing companies in Quebec reported the strongest increase in new export orders.
Input costs faced by manufacturers in Ontario were broadly unchanged over the month.
"The RBC PMI rose with spectacular fashion in May, signalling the
strongest manufacturing expansion in 11 months," said Cheryl Paradowski, president and chief executive officer, PMAC. "The headline RBC PMI index improved significantly over previously
disappointing readings in 2013, reflecting the first increase in output
levels in three months and an accelerated rate of new order growth."
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 Purchasing Management Association of Canada
The Purchasing Management Association of Canada (PMAC) is the leading,
and the largest, association in Canada for supply chain management
professionals. With 7,000 members working across private and public
sectors, PMAC is the principal source of supply chain training,
education and professional development in the country, requiring all
members to adhere to a Code of Ethics. Through its 10 Provincial and
Territorial Institutes, PMAC grants the SCMP (Supply Chain Management
Professional) designation, the highest achievement in the field and the
mark of strategic leadership. For more information please see www.pmac.ca.
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over 2,800 employees. The company provides independent data, valuations
and trade processing across all asset classes in order to enhance
transparency, reduce risk and improve operational efficiency. Its
client base includes the most significant institutional participants in
the financial marketplace. For more information, 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 www.markit.com/economics.
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provided herein is owned by 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
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Image with caption: "RBC Canadian Manufacturing PMIT - Canadian manufacturing conditions improve considerably in May (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20130603_C4188_PHOTO_EN_27362.jpg
For further information:
Royal Bank of Canada
Gillian McArdle, Head of Communications, Canada
RBC Capital Markets
Elyse Lalonde, Communications Manager, Canada
RBC Capital Markets
Purchasing Management Association of Canada
Cheryl Paradowski, President and CEO
Cori Ferguson, Director, Public Affairs & Communications
Mark Wingham, Economist
Rachel Harling, Corporate Communications
Telephone +001-917-441-6345 / +001-646-351-3584