TORONTO, Oct. 1, 2013 /CNW/ - Canada's manufacturing expansion
accelerated to a 15-month high in September, 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 Supply Chain
Management Association (SCMA), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian
manufacturing sector.
The seasonally adjusted RBC PMI - a composite indicator designed to provide a single-figure snapshot of
the health of the manufacturing sector - rose to 54.2 in September, up
from 52.1 in August. This indicated further improvement in
manufacturing business conditions, with the rate of growth above the
series average and the fastest since June 2012.
The RBC PMI found that both output and new order growth accelerated in September.
In particular, the latest rise in total new work intakes was strong and
the fastest since June 2012. This partly reflected the greatest
increase in new export orders for two-and-a-half years. Meanwhile, the
rate of job creation also quickened to a 15-month high, as firms hired
additional staff to handle increased business activity.
"The global economy is gaining traction, and, with that, we are
seeing increasing demand for Canadian exports - particularly from
the manufacturing sector, which has contributed to the PMI reaching
a 15-month high in September," said Craig Wright, senior vice-president and chief economist, RBC. "While challenges in the sector remain, this rebound is encouraging.
An anticipated strengthening in global economic growth, particularly in
the U.S. which is Canada's largest trading partner, bodes well for
manufacturing activity late this year and early next."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the September survey include:
-
strongest rise in new orders since June 2012;
-
employment increases at fastest rate for 15 months; and
-
average selling prices rise for first time since May.
Incoming new work at Canadian manufacturers increased for the sixth
consecutive month in September. Moreover, the rate of new order growth was strong and the fastest in 15 months. Firms generally cited
new product launches, as well as greater demand, both domestically and
in key export markets such as the United States. Concurrently, new export orders rose at the sharpest rate for two-and-a-half years in September.
Firms raised production in light of higher new order volumes. Output rose solidly over the
month, and at the fastest rate since May. Nevertheless, outstanding business increased for the first time in four months and at the strongest pace
for two years, while stocks of finished goods were broadly the same as in August.
The quantity of inputs bought by manufacturing companies increased for the sixth successive month in
September. The rate of growth was solid and the strongest since August
2012. Stocks of purchases also increased, although the rate of accumulation was marginal.
Concurrently, suppliers' delivery times lengthened further in the latest survey period, with panellists
suggesting that vendors were generally busier and had leaner
inventories. Overall, the latest increase in lead times for inputs was
solid and the greatest for 15 months.
Employment growth in the Canadian manufacturing sector accelerated to a 15-month
high in September. Approximately 17 per cent of firms hired additional
staff since August, and generally attributed this to increased business
activity.
Manufacturers faced higher input prices in September, with raw materials and transportation costs having
increased over the month. That said, the overall rate of inflation
eased slightly since August and was weaker than the series average.
Firms passed on higher costs to clients by raising their selling
prices. On average, output charges rose moderately and for the first time since May.
Regional highlights include:
-
Manufacturing business conditions improved across all four regions, led
by Alberta and British Columbia.
-
New orders increased in Ontario, reversing a reduction one month previously.
-
Alberta and British Columbia recorded the strongest rate of employment growth.
-
Quebec saw the weakest increase in input prices in September.
"After a prolonged period of weakness, the Canadian manufacturing sector
appears to be back on track with the RBC PMI rising above its series
average to a 15-month high", said Cheryl Paradowski, president and chief executive officer, SCMA. "The main driver of the
expansion was an increase in new orders, which in itself reflected the
greatest rise in new export work since March 2011. Production levels
were insufficient to fully meet new order requirements, with backlogs
of work rising at the sharpest rate for two years."
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 Supply Chain Management Association
As the leading and largest association in Canada for supply chain
management professionals, the Supply Chain Management Association
(SCMA) is the national voice for advancing and promoting the
profession. SCMA sets the standard of excellence for professional
skills, knowledge and integrity and was the first supply chain
association in the world to require that all members adhere to a Code
of Ethics.
With nearly 8000 members working across the private and public sectors,
SCMA is the principal source of supply chain training, education and
professional development in the country. Through its 10 Provincial and
Territorial Institutes, SCMA grants the Supply Chain Management
Professional (SCMP) designation, the highest achievement in the field
and the mark of strategic supply chain leadership.
SCMA was formed in 2013 through the amalgamation of the Purchasing
Management Association of Canada and Supply Chain and Logistics
Association of Canada. With a combined history of more than 140 years,
today the association embraces all aspects of strategic supply chain
management, including: purchasing/procurement, strategic sourcing,
contract management, materials/inventory management, and logistics and
transportation. For more information, please visit scmanational.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 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 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.
SOURCE Markit
Image with caption: "Canada's manufacturing sector rises to 15-month high in September (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20131001_C5797_PHOTO_EN_31508.jpg
