TORONTO, Jan. 2, 2013 /CNW/ - The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) indicated only a marginal rise in new order volumes and broadly no
change in output in December. 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
manufacturing sector.
The headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - remained at 50.4 for the
second month running in December, signalling only a marginal
improvement in manufacturing operating conditions. The RBC PMI,
meanwhile, averaged 50.7 over the fourth quarter as a whole, down from
52.8 in the third quarter and was the lowest quarterly reading since
data collection began in October 2010.
The RBC PMI found that new orders increased in December, partly reflecting greater
demand and new product launches, but output levels were broadly
unchanged from November. Meanwhile, employment continued to increase,
but the rate of job creation was at an 11-month low and input prices
rose at the slowest pace since July.
"A weak global economy and a strong loonie have weighed somewhat on the
broader sector and contributed to a flat PMI reading compared to
November," said Craig Wright, senior vice-president and chief economist, RBC. "That said, as the
cloak of uncertainty is removed from the global economy in the coming
months related to fiscal policy in the U.S. and elsewhere, we expect
that demand for Canadian exports will rise, as will investment and
hiring across the economy."
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 December survey include:
-
RBC PMI remains at lowest reading since data collection began in October
2010;
-
output broadly unchanged from November, while new orders increase only
marginally; and
-
slowest rate of employment growth since January.
Canadian manufacturers received a larger volume of new orders in December, after broadly no change in November. Firms commented on
greater client demand and the launch of new products. That said, the
rate of growth was only marginal, with new export work falling for the second month running.
Despite the rise in new orders, output was broadly unchanged from one month earlier. Nonetheless, the flat
production trend was an improvement from a modest reduction in the
previous survey period. Concurrently, backlogs of work were depleted at a marked pace and stocks of finished goods rose, albeit the rate of inventory accumulation was only marginal.
Employment in Canada's manufacturing sector increased further during December,
with approximately 14% of firms hiring additional staff since November.
Job creation has been reported in each month since February, but was
the weakest in this sequence of growth.
A marginal increase in the quantity of purchases was reported by respondents in the latest survey period. That said, input inventories were depleted and at the strongest rate since January 2012.
Suppliers' delivery times lengthened further in December, with panellists commenting on raw
material shortages and transportation delays, particularly with
international vendors. However, the latest increase in lead times was
only modest and the weakest in the 27-month series history.
Manufacturers reported a fifth successive monthly rise in input costs in December. Although the rate of inflation was solid, it was
nonetheless the slowest in the current sequence of price increases.
Firms passed greater costs on to clients by raising their output
charges. Nonetheless, average selling prices rose only modestly and at the weakest rate since July.
Regional highlights include:
-
Manufacturing business conditions improved in Alberta and British Columbia and Ontario in December.
-
The strongest rate of new order growth was posted in Ontario.
-
Job creation was reported in Alberta and British Columbia and Ontario, while job losses were reported elsewhere.
-
Quebec posted the slowest rate of input price inflation in December.
"The headline RBC PMI index indicated only a marginal improvement in
manufacturing business conditions in December, with output largely
stagnating and new orders increasing only marginally from November,"
said Cheryl Paradowski, president and chief executive officer, PMAC. "Both the Output and New Orders indices showed improved trends in the
latest survey, but the remaining three components of the PMI have
deteriorated. In particular, the Employment Index pointed to the
weakest rate of job creation in 11 months."
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
GDP.
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
direction.
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 economics@markit.com.
About RBC
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate
under the master brand name RBC. We are Canada's largest bank as
measured by assets and market capitalization, and among 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 wholesale banking on a global basis. We employ
approximately 80,000 full- and part-time employees who serve more than
15 million personal, business, public sector and institutional clients
through offices in Canada, the U.S. and 49 other countries. For more
information, please visit rbc.com.
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.
About Markit
Markit is a leading, global financial information services company with
over 2,500 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.
About PMIs
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.
The intellectual property rights to the RBC Canadian Manufacturing PMI
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
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 trade marks of Markit Economics Limited, RBC uses the above marks
under licence. Markit and the Markit logo are registered trade marks of
Markit Group Limited.
Image with caption: "RBC Canadian Manufacturing Purchasing Managers' Index™: manufacturing activity rises marginally in December, matching November's pace (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20130102_C3114_PHOTO_EN_22175.jpg
SOURCE: RBC
