TORONTO, July 2, 2014 /CNW/ - The RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™) pointed to a solid rebound in the performance of the manufacturing
sector in June, as output and new business growth picked up to the
strongest recorded so far in 2014. 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.
Adjusted for seasonal influences, the headline RBC Canadian
Manufacturing PMI registered 53.5 in June, up from 52.2 in May, to
signal the sharpest overall improvement in business conditions since
December 2013. The rise in the headline index was mainly driven by
stronger rates of output and new business expansion.
"The latest RBC PMI data indicates that in June, Canada's manufacturers
experienced the best conditions for growth in half a year," said Craig Wright, senior vice-president and chief economist, RBC. "We expect that those conditions will further improve going forward
supported by a strengthening global economy, increases in external
demand for domestic goods and a depreciating Canadian dollar."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the June survey include:
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Output and new orders rose at sharpest pace in 2014 to date
-
Job creation strengthened
-
Input cost inflation eased for the third month running
Manufacturing output growth picked up markedly from the nine-month low
registered in May. The current period of rising production volumes
stretches back to May 2013, with survey respondents attributing the
latest expansion to greater client spending and new product launches.
In line with the trend for output, new business growth rebounded in June
and reached a six-month high. Manufacturers mainly cited stronger
domestic demand, as new export order growth remained only marginal,
despite accelerating from the 14-month low registered in May. When a
rise in new work from abroad was reported, survey respondents generally
pointed to improved demand from clients in the United States.
Staffing levels increased at a solid pace in June, thereby extending the
current period of manufacturing job creation to five months. Despite an
upturn in payroll numbers, stronger demand resulted in the fastest rise
in backlogs of work since March.
Greater production requirements boosted input buying across the
manufacturing sector in June, with the latest expansion of purchasing
activity the fastest seen in 2014 to date. Stocks of purchases
nonetheless dipped slightly in June, which contrasted with a marginal
rise in post-production inventory levels.
Canadian manufacturers indicated that input prices increased for the
twenty-third consecutive month in June. The latest survey pointed to a
sharp rise in average cost burdens, but the rate of inflation was the
lowest since the start of the year. A number of firms cited exchange
rate depreciation against the U.S. dollar as having pushed up prices
for imported raw materials. There were also reports of rising
oil-related costs in June. Meanwhile, factory gate price inflation
eased for the second time in the past three months and was the lowest
since December 2013.
Regional highlights include:
-
Quebec posted the fastest overall improvement in business conditions...
-
...followed by Alberta & British Columbia
-
All four regions registered a rise in new export orders
-
Employment growth was strongest in Quebec and Ontario
"The second quarter of 2014 ended on a positive note for the Canadian
manufacturing sector," said Cheryl Paradowski, president and chief executive officer, SCMA. "Stronger business conditions were underlined by the fastest expansion
of output so far this year, alongside a solid rebound in client
spending. Manufacturers are continuing to recruit additional staff at a
solid place, highlighting strong confidence about the outlook for
production volumes over the months ahead."
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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more than $104 million to causes worldwide, including donations and
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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 RBC
Image with caption: "Canada's manufacturing conditions improved in June (CNW Group/RBC)". Image available at: http://photos.newswire.ca/images/download/20140702_C9280_PHOTO_EN_41807.jpg
