TORONTO, Aug. 4, 2015 /CNW/ - The latest RBC PMI survey highlighted sustained expansion of production and
new business volumes in July, which underpinned an improvement in
operating conditions for the second month running. . Increased export
sales continued to support the manufacturing sector rebound, though the
overall speed of recovery slowed from the six-month high recorded in
June.
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 50.8 in July, the seasonally adjusted RBC Canadian Manufacturing PMI dipped from June's six-month high of 51.3 but remained above the
neutral 50.0 threshold. The latest reading was still stronger than the
average for 2015 so far (49.9), and signaled a marginal upturn in
manufacturing sector business conditions.
"The RBC PMI indicates a second consecutive month of improving business
conditions in July though still at a very modest pace and slightly
below that achieved in June," said Paul Ferley assistant chief economist, RBC. "As we enter the second half the year, a strengthening U.S.
economy and weaker Canadian dollar should provide a greater boost to
exports and business conditions for manufacturers."
The headline RBC PMI reflects changes in output, new orders, employment, inventories and
supplier delivery times.
Key findings from the July survey included:
-
RBC Canadian Manufacturing PMI remained above the crucial 50.0 no-change
mark
-
Output growth moderated from June's six-month high
-
Renewed fall in employment levels
A modest increase in production volumes kept the headline index above
the critical 50.0 no-change mark in July. Manufacturing output has now
expanded for three months running, which firms mainly linked to a
slight rebound in client spending.
July data pointed to a marginal increase in overall new business
volumes; however, the rate of expansion was unmoved from the marginal
pace recorded in June. A further modest upturn in new export work
continued to boost manufacturers' order books. Anecdotal evidence
mainly cited stronger demand from U.S. clients, helped in part by the
weaker exchange rate. Manufacturers of consumer goods, especially those
in the automotive sector, generally pointed to improving inflows of new
work. That said, a number of manufacturers in the investment goods
sector suggested that lower energy sector capital spending remained a
drag on growth.
Despite rising levels of production and new work in July, the latest
survey pointed to a renewed fall in staffing numbers across the
manufacturing sector as a whole. Survey respondents that lowered their
payroll numbers mostly pointed to the non-replacement of voluntary
leavers in response to excess capacity. Backlogs of work meanwhile
decreased for the eighth consecutive month in July, which is the
longest continuous period since the survey began in October 2010.
Manufacturers in Canada remained cautious in terms of their inventory
holdings in July, as highlighted by further slight falls in
pre-production stocks and finished goods inventories. However, the
latest reductions were slower than those recorded in June. Meanwhile,
suppliers' lead-times continued to lengthen during July, which some
manufacturers attributed to reduced stock holdings at vendors.
On the prices front, the latest survey highlighted a robust and
accelerated increase in average cost burdens across the manufacturing
sector. The rate of input price inflation was the fastest for three
months, with a number of manufacturers noting higher prices for
imported components and raw materials. Increased cost burdens in turn
contributed to the most marked rate of factory gate price inflation
since February.
Regional highlights include:
-
Ontario recorded the fastest upturn in overall manufacturing sector
conditions in July
-
Alberta and British Columbia remained the worst performing region…
-
…but the latest deterioration in operating conditions was the least
marked since February
-
Manufacturing jobs growth was strongest in Ontario, followed by Quebec
"July's survey highlights another steady upturn in manufacturing
production and new order volumes, which leaves the sector well placed
to remain on a recovery footing through the third quarter of 2015" said
Cheryl Paradowski, president and chief executive officer, SCMA. "Exchange rate depreciation and stronger U.S. consumer spending
continue to help shore up demand for Canadian manufactured goods, in
turn offsetting some of the momentum lost from weaker energy sector
spending patterns."
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, insurance, investor
services and capital markets products and services on a global basis.
We employ approximately 78,000 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 39 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 2014, we contributed
more than $111 million to causes worldwide, including donations and
community investments of more than $76 million and $35 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 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
approximately 4,000 people in 11 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 over 30 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. 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(TM) (CNW Group/Markit)". Image available at: http://photos.newswire.ca/images/download/20150804_C9330_PHOTO_EN_44063.jpg
