TORONTO, May 1, 2013 /CNW/ - The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) suggests that the Canadian manufacturing sector stagnated in April - an
improvement from the contraction observed in March. 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 - registered 50.1 in April and,
posting only slightly above the 50.0 no-change mark, signalled broadly
no change in overall manufacturing business conditions. However, the
PMI nonetheless rose from a survey-low of 49.3 in March, which was
consistent with a modest deterioration in operating conditions.
The RBC PMI found that manufacturing output levels in April were largely the same
as March, despite the volume of new orders having increased, albeit
only marginally. Employment was also little-changed, seeing only a
slight rise in staff numbers since March. On the price front, the rates
of increase for both input costs and output charges eased, with the
rate of input price inflation, in particular, the slowest in nine
months.
"Canada's manufacturing sector kept its head above water in April,
registering some improvement over the surprising series low recorded
last month," said Craig Wright, senior vice-president and chief economist, RBC. "While the overall
gains made in April were tepid, we expect manufacturing output to
pick-up, augmenting export activity and supporting Canada's growth
prospects."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the April survey include:
-
Output levels largely unchanged in April, following a reduction in
March;
-
marginal rise in total new work; and
-
slowest rate of input price inflation since July 2012.
Incoming new work at Canadian manufacturers increased in April, with firms generally
linking this to greater demand. Although the rate of growth was only
marginal and weaker than the series average, it was nonetheless in
contrast with a reduction in March. Overall, the rise in total new work
also reflected larger volumes of new export orders, which rose at the strongest rate in six months during April.
Despite higher new order requirements, production levels were largely the same as one month previously. The stagnant
output trend in April nevertheless follows a decline in March.
Meanwhile, stocks of finished goods were accumulated for the first time in 2013 to date, albeit marginally,
and backlogs of work continued to fall for the seventh consecutive month.
The quantity of inputs bought by manufacturers was also broadly the same as in the previous
survey period, rising only fractionally over the month. Stocks of purchases, meanwhile, were depleted for the sixth consecutive month in April, and
at the joint-fastest rate since January 2012.
Suppliers' delivery times continued to lengthen in April, with approximately seven per cent of
panellists reporting a deterioration in vendor performance. That said,
the latest increase in lead times was the weakest since last December.
After adjusting for seasonal variation, manufacturing employment in Canada was largely unchanged in April. The corresponding index fell
further from February's four-month peak and was the second-lowest since
data collection began in October 2010.
In April, manufacturers reported the weakest rise in cost burdens since July 2012. The modest increase in costs nonetheless partly
reflected higher prices for raw materials, packaging and
transportation. Firms passed on greater costs to clients by raising
their selling prices. Output charges rose at a rate in line with the series average that was
also stronger than the increase in input prices.
Regional highlights include:
-
Solid falls in manufacturing output were recorded for Alberta and British Columbia and Ontario.
-
Following a deterioration in March, manufacturing business conditions in
Quebec improved during April.
-
Manufacturers in Quebec saw the strongest rise in new export work in April.
-
Employment growth was recorded in two of the four regions, with the
strongest increase posted in Quebec.
"Despite the RBC PMI rising from a survey low in March, it was much
weaker than the series average and suggests that the Canadian
manufacturing sector stagnated in April," said Cheryl Paradowski, president and chief executive officer, PMAC. "A return to growth for new orders, partly reflecting a modest rise in
new export work, may lead to an increase in production over the coming
months. In the meantime, manufacturers' profitability is protected to
some extent by output charges rising at a faster rate than input
costs."
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 are 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,
corporate and investment banking and 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.
RBC supports a broad range of community initiatives through donations,
sponsorships and employee volunteer activities. In 2012, we contributed
more than $95 million to causes worldwide, including donations and
community investments of more than $64 million and $31 million in
sponsorships.
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 2,800 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.
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 PMI™ - Canada's manufacturing output slightly improves in April (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20130501_C9994_PHOTO_EN_26172.jpg
SOURCE: RBC
