RBC's Craig Wright says economic weak patch to be short lived
TORONTO, Dec. 3, 2012 /CNW/ - The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) signalled that Canada's manufacturing sector grew only marginally in
November. 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 - fell from 51.4 to 50.4 in
November, and indicated the weakest rate of manufacturing growth since
data were first available in October 2010.
The fall in the RBC PMI partly reflected incoming new work remaining broadly unchanged from
October and the first contraction in output in 26 months of data
collection. Manufacturers generally cited weak market conditions.
Nevertheless, firms continued to hire additional staff in November,
although the rate of job creation was only modest and the slowest since
"Minimal growth in the manufacturing sector in November likely reflects
the continued global economic uncertainty and the time-lagged impact of
other indicators suggesting that the Canadian economy weakened during
the third quarter," said Craig Wright, senior vice-president and chief economist, RBC. "We expect the
economic weak patch to be short lived, however. As the downside risks
plaguing the global economy start to ease, so will some of the weight
on Canadian export demand and the broader manufacturing sector."
In addition to the headline RBC PMI, the survey also tracks changes in output, new orders, employment,
inventories, prices and supplier delivery times.
Key findings from the November survey include:
RBC PMI falls to lowest level in 26 months of data collection;
output declines in November, while new orders broadly unchanged from
rate of job creation at seven-month low.
The volume of new orders received by Canadian manufacturers was broadly unchanged from October,
with panellists largely linking this to weak market conditions. New export orders meanwhile fell modestly and for the first time since February.
The flat new orders trend was one of the factors behind a fall in production during November. This was the first reduction in output in 26 months of
data collection, but the rate of decline was only marginal. Stocks of finished goods, meanwhile, were depleted, in contrast to accumulation one month
previously, and backlogs of work fell sharply and for the second month running.
Reflective of lower output requirements, the quantity of inputs bought by manufacturing firms fell during the latest survey period. Stocks of purchases were also reduced, with a number of panellists attributing this to
leaner inventory requirements.
Suppliers' delivery times nonetheless lengthened further in November, with approximately 11 per
cent of firms reporting increased lead times since October. Respondents
suggested that suppliers were working with less stock and that some
vendors were also affected by Hurricane Sandy.
Manufacturing employment in Canada increased for the tenth consecutive month in November. Where
higher staffing levels were reported, firms commented on replacing
employees who had recently left. However, the rate of job creation was
only modest and the slowest since April.
Firms reported a further rise in cost burdens during the latest survey
period, with this largely reflective of higher raw material prices.
That said, the rate of input price inflation was the weakest in three months and slower than the series average.
Manufacturers' selling prices also increased in November as panellists passed on greater costs to
clients. Despite having quickened since October, the latest increase in
output prices remained modest overall.
Regional highlights include:
Alberta and British Columbia and Ontario were the only Canadian regions to post improved manufacturing operating
conditions in November.
New orders fell in three regions, with only Ontario recording an increase in new work since October.
The strongest rate of employment growth was posted in Alberta and British Columbia.
Input prices rose at the fastest rate in Alberta and British Columbia, while the slowest increase was recorded in Quebec.
"November was one of the most difficult months for Canadian
manufacturers in the past two years, with RBC PMI data showing a
month-over-month fall in production and new order growth grinding to a
halt. This reflected weaker domestic and export market conditions,"
said Cheryl Paradowski, president and chief executive officer, PMAC. "Nonetheless, firms continued to hire additional staff, although the
rate of job creation slowed for the sixth month running and was only
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 2,500 employees. The company provides independent data, valuations
and trade processing across all asset classes in order to enhance
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including the Eurozone. They are the most closely-watched business
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Image with caption: "RBC Canadian Manufacturing PMI™ Manufacturing conditions marginally improve in November (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20121203_C5211_PHOTO_EN_21430.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