TORONTO, Sept. 3, 2013 /CNW/ - Canada's manufacturing expansion was
sustained for a fifth consecutive month in August, but the rate of
growth was modest and below average, 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.
After accounting for usual seasonal variation, the RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - posted 52.1 in August,
little-changed from July's reading of 52.0. Remaining above the neutral
threshold of 50.0, the RBC PMI has indicated growth of the
manufacturing sector for five consecutive months, although the latest
expansion was modest and weaker than the series average.
The RBC PMI found that both output and new orders rose at modest rates during
August. This generally reflected greater client demand in both the
domestic and export markets. Firms hired additional staff in light of
higher activity levels, with the rate of employment growth accelerating
to a three-month high. On the price front, input cost inflation picked
up further, while output charges fell for the second month running.
"The PMI continued to make positive gains for the fifth consecutive
month and moved modestly higher in August, suggesting some of the
recent shocks to the economy have been mitigated by strength
elsewhere," said Craig Wright, senior vice-president and chief economist, RBC. "We expect that
improving U.S. demand will continue to provide a boost to the
manufacturing sector for the balance of the year."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the August survey include:
-
output and new order growth continues;
-
strongest rise in employment since May; and
-
input price inflation picks up to a five-month high.
Manufacturers received a larger volume of new orders in August, as has been the case in each month since April. New work
intakes grew in both the domestic and export markets, with the United States particularly highlighted as a source
for the latter. Overall, total new order growth was solid, albeit
unchanged from a three-month low recorded in July.
Reflective of increased new work, firms raised production and depleted existing inventories of finished goods. Output rose modestly in August, despite the rate of growth being the
weakest in the past four-months.
The quantity of inputs bought by Canadian manufacturers rose marginally in the latest survey period. Stocks of purchases also fell, albeit slightly, having increased one month previously. The
reduction in input inventories partly reflected a preference for leaner
stocks, but was also to offset longer suppliers' delivery times. Lead times for inputs, on average, increased for the second month
running in August.
Employment in the Canadian manufacturing sector rose further in August, which is
the 19th consecutive month of growth. Approximately 18 per cent of surveyed
firms hired additional staff since July (while seven per cent reduced
their staff numbers) and often cited increased business activity.
Overall, the rate of job creation was solid and the second-fastest in a
year.
Input costs faced by manufacturers continued to rise in August. Panellists commonly
reported higher prices for commodities, including oil and metals.
Although the rate of inflation accelerated for the fourth month running
to its fastest pace since March, it nonetheless remained weaker than
the historic average.
In contrast, average selling prices at manufacturing firms fell for the second month running. This was the
first back-to-back reduction in output charges since data collection
began in October 2010.
Regional highlights include:
-
Ontario saw only a marginal improvement in manufacturing business conditions in
August - the weakest among the four regions.
-
New orders fell in Ontario, but increased elsewhere.
-
Employment growth was strongest in Alberta and British Columbia.
-
Output charges fell in three regions, led by Alberta and British Columbia.
"Higher client demand supported a further expansion of the Canadian
manufacturing sector in August. New domestic work continued to increase
and was matched by a further rise in exports, partly reflecting
favourable market conditions in the U.S.," said Cheryl Paradowski, president and chief executive officer, PMAC. "The survey also showed
improvement elsewhere, with the Employment Index, in particular,
suggesting the second-strongest increase in a year."
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 3,000 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: "Manufacturing business conditions improved modestly in August (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20130903_C9419_PHOTO_EN_30291.jpg
SOURCE: RBC
