TORONTO, July 2, 2013 /CNW/ - The Canadian manufacturing sector
continued to expand in June, with sustained growth in output, new
orders and employment, 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
manufacturing sector.
The headline RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - suggested a moderate
improvement in Canadian manufacturing business conditions in June. At
52.4, the headline index remained above the 50.0 no-change mark and was
at the second-highest level since last September, despite a dip from
53.2 in May.
The RBC PMI signalled ongoing growth of both output and new orders in June.
Although having eased since May, the latest expansions were nonetheless
stronger than those registered at the beginning of the year. Reflecting
increased new work, manufacturers continued to add to their workforces,
hiring staff at a faster rate than the series average. Meanwhile, a
stronger rise in input costs added pressure to margins, especially as
output charges were unchanged from one month earlier.
"Canada's manufacturing sector continued to expand in June - a sign that
the slowdown earlier this year was in fact a temporary blip," said Craig Wright, senior vice-president and Chief Economist, RBC. "Moving into the
second half of 2013, an anticipated strengthening in international
demand will help the sector shake off its relatively lacklustre
performance it has recorded over the past year."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the June survey include:
-
both output and new orders increase solidly, but at weaker rates;
-
suppliers' delivery times shorten for first time in 33-month series
history; and
-
rate of input price inflation accelerates to three-month high.
Manufacturers received a larger volume of new orders in June, and generally attributed this to greater client demand. New export work also rose over the month, with firms particularly mentioning an
increase in new orders from Europe. Overall, total new order growth was
solid, but slower than the 11-month peak recorded in May.
Firms raised their production levels and depleted stocks of finished goods in light of higher new order requirements. Output increased for the second consecutive month in June, with the latest
rise broadly in line with the series average. Meanwhile, backlogs of work fell, but the reduction mostly reversed an increase in May.
Concurrently, the quantity of inputs bought by manufacturing companies rose further during June. Stocks of purchases were meanwhile broadly the same as in May, with two-in-three panellists
reporting no change in input inventories.
For the first time in the 33-month series history, lead times for inputs
fell during June. A number of survey respondents suggested that vendors
were less busy and were actively reducing the amount of work-in-hand.
Nonetheless, suppliers' delivery times shortened only marginally.
Manufacturing employment in Canada continued to rise in June, with one-in-five surveyed firms
hiring additional staff since May. Anecdotal evidence linked job
creation to the recent expansion in new orders. Overall, the rate of
employment growth was solid, but slightly weaker than the nine-month
high recorded in the previous survey period.
Input costs faced by manufacturers increased in June, with higher raw material
prices, particularly for steel, commonly reported by panellists. The
rate of inflation was the strongest in three months, but remained
weaker than the series average. Meanwhile, firms left their output charges unchanged from May. This ended a 14-month sequence of increases.
Regional highlights include:
-
Manufacturing business conditions improved in three out of the four
Canadian regions, with the exception of Alberta and British Columbia.
-
Manufacturers in Quebec reported a strong rise in output during June.
-
Manufacturing employment was largely unchanged in Alberta and British Columbia, but rose elsewhere.
-
Ontario posted the weakest rise in input prices in June.
"Despite having eased since May, the Canadian manufacturing sector
continued to grow moderately in June, representing an improvement from
the marginal expansion registered at the beginning of the year. In
fact, the average RBC PMI reading for Q2 was the highest since Q3
2012," said Cheryl Paradowski, president and chief executive officer, PMAC. "A further rise in new
orders, partly reflecting greater client demand, continued to support
growth of output and employment in June."
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,
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 44 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: "Canada's manufacturing sector continued to expand in June (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20130702_C4423_PHOTO_EN_28643.jpg
SOURCE: RBC
