TORONTO, April 1, 2014 /CNW/ - Solid rates of growth in output and new
business were recorded across the Canadian manufacturing sector in
March, 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.
At 53.3 in March, up from 52.9 in the previous month, the headline RBC
PMI was the highest since December 2013. The index has now registered
above the neutral 50.0 value for 12 consecutive months and the latest
reading indicated a solid pace of expansion across the manufacturing
sector.
New export orders increased at the second-fastest pace since last
October but, on a less positive note, there were widespread reports
that supply disruptions had led to longer delivery times for raw
materials and an associated increase in unfinished work in March.
Meanwhile, input cost inflation was the steepest since May 2011, which
manufacturers overwhelmingly linked to currency surcharges related to
the weakening Canadian dollar.
"Canada's manufacturers have experienced solid conditions for growth in
the last year, and March was no different - we saw a nice uptick from a
month earlier," said Craig Wright, senior vice-president and chief economist, RBC. "We continue to expect that underlying economic conditions - a
strengthening U.S. economy and a weaker Canadian dollar - will lay the
foundation for a boost in domestic manufacturing in the near-term."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices
and supplier delivery times.
Key findings from the March survey include:
-
Solid improvement in business conditions
-
A rebound in exports supported overall new business growth in March
-
A weaker Canadian dollar contributed to further upturn in cost inflation
The rise in the headline RBC PMI was driven by an improvement in new
business growth from the six-month low recorded in February. Moreover,
the latest increase in new work was the fastest in 2014 to-date. Higher
levels of incoming new business partly reflected an acceleration of new
export order growth.
Production volumes continued to rise at a solid pace in March, but the
rate of expansion eased fractionally over the month. The latest data
suggested that manufacturers experienced delays in receiving raw
materials from vendors, which weighed on output and created an
accumulation of backlogs in March. This was highlighted by outstanding
business volumes rising at the steepest pace since August 2011.
Average lead-times from suppliers lengthened to the greatest degree for
just over two-and-a-half years in March. Anecdotal evidence cited a
range of factors, including the Port of Vancouver strikes, rail
transportation delays and ongoing logistics bottlenecks following
adverse weather disruptions in the U.S. The latest data also
highlighted delays in shipments of manufacturers' finished goods, as
signalled by post-production inventory levels rising at the strongest
pace since November 2010.
Longer supplier delivery times and rising new business levels encouraged
some manufacturers to build their stocks of inputs in March. As a
result, pre-production inventory levels increased for the first time in
four months, albeit at a marginal pace. Meanwhile, input buying rose at
the fastest pace recorded in 2014 to-date.
On the inflation front, input costs increased sharply, and the rate of
inflation accelerated for the fourth month in a row. This in turn
contributed to a further robust rise in factory gate charges in March,
with the pace of inflation the steepest for almost three years.
Regional highlights include:
-
Ontario recorded the fastest expansion of manufacturing production.
-
All four regions posted an acceleration of new export gains.
-
Quebec experienced the most marked rise in employment.
-
Alberta & British Columbia posted the steepest increase in average cost burdens.
"Manufacturers reported a welcome recovery in new order volumes, helped
by stronger export demand, and this in turn supported job creation
during March" said Cheryl Paradowski, president and chief executive officer, SCMA. "There were signs that supply chain disruptions held back production
growth and caused unfinished work to accumulate in March, although
subsequent efforts to reduce backlogs may well boost output levels in
the coming months. Input prices meanwhile continue to rise sharply in
the wake of the weakening exchange rate."
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 is Canada's largest bank, and one of the largest
banks in the world, based on market capitalization. We are one of North
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sponsorships. Learn more at www.rbc.com/community-sustainability.
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 diversified provider of financial information
services. We provide products that enhance transparency, reduce risk
and improve operational efficiency. Our customers include banks, hedge
funds, asset managers, central banks, regulators, auditors, fund
administrators and insurance companies. Founded in 2003, we employ over
3,000 people in 11 countries. For more information, please see www.markit.com
About PMI
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 are owned by or licensed to 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 either registered trade marks of Markit Economics Limited or are
licensed to Markit Economics Limited. RBC uses the above marks under
licence. Markit is a registered trade mark of Markit Group Limited.
SOURCE Markit
Image with caption: "Canada's manufacturing sector experienced strong growth in March (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20140401_C8087_PHOTO_EN_38641.jpg