TORONTO, Sept. 2, 2014 /CNW/ - August data pointed to a robust upturn in
the performance of the Canadian manufacturing sector, according to the RBC Canadian Manufacturing Purchasing Managers' Index™ (RBC PMI™), with overall business conditions improving at the fastest pace since
November 2013. 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 54.8 in August, up from 54.3 in July and
comfortably above the neutral 50.0 value. The latest reading was the
highest for nine months and indicated a robust improvement in overall
operating conditions across the manufacturing sector. Output and new
business growth both accelerated during August, while job creation
picked up markedly to its strongest for 11 months. Meanwhile, cost
pressures subsided to their weakest so far this year, which contributed
to a further moderation in factory gate price inflation during the
latest survey period.
"The momentum in Canada's manufacturing sector is clearly being
sustained with the index registering the ninth consecutive month of
improvement," said Craig Wright, senior vice-president and chief economist, RBC. "We expect that Canadian manufacturers will continue to directly
benefit from the strengthening U.S. economy, which has made and will
continue to make positive strides."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the August survey include:
-
RBC Manufacturing PMI hits nine-month high
-
Sharpest rises in output and new orders since November 2013
-
Job creation strongest for almost a year
Canadian manufacturers signalled a robust and accelerated expansion of
production levels in August, thereby extending the current period of
growth to 16 consecutive months. Moreover, the latest increase in
output levels was the fastest since last November.
A strong pace of new order growth helped support rising production
volumes during August, with the latest increase in new work being the
steepest since November 2013. Anecdotal evidence cited stronger
domestic spending patterns during the latest survey period, alongside a
boost to order books from higher export sales. August data pointed to
the most marked increase in new work from abroad since March, with a
number of manufacturers attributing the rise to greater spending by
clients in the U.S.
A sustained improvement in new business inflows continued to encourage
job creation across the manufacturing sector in August. The latest
survey highlighted that employment numbers rose for the seventh month
in a row, and at the strongest rate since September 2013. In turn,
increased staffing levels helped slow the pace of backlog accumulation
at manufacturing companies in August.
Greater production schedules resulted in a robust expansion of input
buying within the manufacturing sector during August. Pre-production
stocks were accumulated for the first time in four months, while
finished goods inventories were depleted at a marginal pace. Strong
demand for raw materials contributed to a further lengthening of
suppliers' delivery times in August.
August data provided positive news on the inflation front, with average
input prices increasing at the slowest pace since December 2013.
Reduced cost pressures in turn contributed to the weakest rise in
factory gate charges for nine months.
Regional highlights include:
-
Alberta & British Columbia recorded the sharpest improvement in business conditions
-
Manufacturing employment numbers continued to increase in all four regions
-
New export order gains were strongest in Alberta & British Columbia, followed by Ontario
-
Input cost inflation eased in all four regions during August
"August's survey provides an upbeat assessment of the Canadian
manufacturing sector" said Cheryl Paradowski, president and chief executive officer, SCMA. "Sustained output growth is driving a strong improvement in underlying
business confidence, and in turn bolstering manufacturing job creation.
There are signs that the resurgent U.S. economy is having an
appreciable impact on export sales, as Canadian manufacturers saw one
of the fastest rises in new orders from abroad so far this 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 is Canada's largest bank, and one of 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,
investor services and capital markets products and services on a global
basis. We employ approximately 79,000 full- and part-time employees who
serve more than 16 million personal, business, public sector and
institutional clients through offices in Canada, the U.S. and 40 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 2013, we contributed
more than $104 million to causes worldwide, including donations and
community investments of more than $69 million and $35 million in
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 10 countries. Markit shares are listed on NASDAQ
under the symbol "MRKT". 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: "RBC Canadian Manufacturing PMI™: Canada's manufacturing sector gains momentum in August (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20140902_C8240_PHOTO_EN_42581.jpg
