TORONTO, Dec. 2, 2013 /CNW/ - Business conditions in Canada's
manufacturing sector continued to improve strongly in November,
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 - registered 55.3 in November,
signalling a strong improvement in Canada's manufacturing business
conditions. Although the headline index was down slightly from
October's 55.6, it was consistent with one of the fastest rates of
growth for over two years.
The RBC PMI showed that a marked rise in new order volumes, partly reflective of
new client wins, supported the strongest increase in output since March
2011. Concurrently, firms hired additional staff in November, although
the rate of employment growth eased to a four-month low. On the price
front, inflationary pressures remained muted with the latest rise in
input costs, in particular, weaker than October's seven-month peak.
"Canadian manufacturing conditions continued to be quite favourable in
November, although we saw a slight dip compared to the gains the sector made in October," said Craig Wright, senior vice-president and chief economist, RBC. "While the U.S. government budget impasse negotiations did not come to
a firm resolution, recent reports suggest that the fourth-quarter hit
to U.S. growth will be limited following a solid gain in the third
quarter. A slow and steady increase in U.S. growth will play a big role
in setting the stage for a continuation in the recent momentum we have
seen in Canadian manufacturing activity over the past few months."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the November survey include:
-
marked rates of output and new order growth;
-
rate of job creation eases to four-month low; and
-
input price inflation remains subdued.
Incoming new work at Canadian manufacturers continued to rise markedly
in November. Although the rate of new order growth eased slightly over the month, it was one of the fastest since
data collection began in October 2010. Firms generally cited greater
client demand and new contract wins, including from the United States.
Consequently, new export orders rose for the eighth consecutive month.
Firms raised production in light of larger new order requirements. Notably, the rate of output
growth was marked and the second-fastest in the 38-month series history
(on par with March 2011). Concurrently, stocks of finished goods increased in November, more than reversing a reduction in October, and backlogs of work rose for the third consecutive month, albeit marginally.
Meanwhile, the quantity of inputs bought by Canadian manufacturing firms
rose strongly and at a pace only slightly weaker than October's
25-month peak. The increase in purchasing activity was partially used to rebuild inventories, with stocks of purchases rising for the third month running. Greater demand for inputs was also
a factor behind longer suppliers' delivery times in November. Lead times have increased in each month since July.
Manufacturing employment in Canada rose for the twenty-second consecutive month in November.
However, the overall rate of job creation slowed to a four-month low
that was also weaker than the series average.
Input prices faced by Canadian manufacturing companies increased in November, with
panellists commonly reporting higher prices for steel and fuel.
Nevertheless, the rate of inflation eased to a moderate pace that was
slower than the series average. Firms partially passed on their higher
costs to clients by raising their selling prices. Although output charges increased for the third consecutive month, the latest rise was only
marginal.
Regional highlights include:
-
Business conditions improved across all four Canadian regions. Alberta & British Columbia saw the strongest improvement over the month.
-
Alberta & British Columbia posted the fastest rise in new orders.
-
Ontario saw no change in exports, but this was an improvement from a reduction
one month previously.
-
Manufacturing employment was little-changed in Quebec.
"The Canadian manufacturing sector remained strong as we approach the
year end. Higher domestic and export orders supported further growth
acceleration for output, and also encouraged firms to start rebuilding
their inventories," said Cheryl Paradowski, president and chief executive officer, SCMA. "The Employment Index was a disappointing result from the survey,
having showed the rate of job creation ease to a four-month low, but
perhaps this will pick up if the strong performance of the sector
continues."
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) is Canada's largest bank as
measured by assets and market capitalization, and is 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: "RBC Canadian Manufacturing PMI™ Canada's manufacturing conditions improve strongly in November (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20131202_C6297_PHOTO_EN_34114.jpg
