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About RBC > Media Newsroom > News Releases > RBC PMI: Manufacturing performance drops to a new survey-record low in December

RBC PMI: Manufacturing performance drops to a new survey-record low in December

TORONTO, January 4, 2016 -  The Canadian manufacturing sector experienced another reduction in output volumes and new business intakes at the end of 2015, with the latest deterioration in overall conditions the sharpest since October 2010, according to the December 2015 RBC PMI.

There were widespread reports that subdued business confidence had resulted in lower spending levels and delays to new projects, particularly in the energy sector. Manufacturers responded to the latest fall in new work by lowering their inventories and initiating price discounting strategies. Moreover, payroll numbers decreased for the sixth month running amid a sharp and accelerated fall in work-in-hand across the sector.                      

A monthly survey, conducted in association with Markit, a leading global financial information services company, and the Supply Chain Management Association (SCMA), the RBCPMI offers a comprehensive and early indicator of trends in the Canadian manufacturing sector.

Adjusted for seasonal influences, the RBC Canadian Manufacturing PMI registered 47.5 in December, down from 48.6 in November and below the neutral 50.0 threshold for the fifth consecutive month. The latest PMI reading was the lowest in just over five years of data collection, largely reflecting weaker contributions from the output, new orders and employment components.    

“Business conditions in the Canadian manufacturing sector fell at a survey-record pace in December as weaker domestic demand and ongoing uncertainty in the energy sector continues to take its toll,” said Craig Wright, senior vice-president and chief economist, RBC. “Across Canada, Alberta and British Columbia experienced the sharpest deterioration in conditions, while Ontario continued to be a national bright spot, posting a sustained rise in output production. As the U.S. economy strengthens, we expect to see improvements in Canadian manufacturing sector activity levels.”

The headline RBC PMI reflects changes in output, new orders, employment, inventories and supplier delivery times.

Key findings from the December survey included:

  • Sharpest deterioration in business conditions since the survey began in 2010
  • Output, new order volumes and employment all decline at faster rates in December
  • Factory gate charges decrease for the first time since August 2013

Canadian manufacturers signalled a decline in production levels for the fifth month running in December, which was overwhelmingly linked to weaker domestic demand patterns. Although new export work picked up slightly, and at the fastest pace since June, overall volumes of new work decreased at a survey-record pace. Companies that reported a rise in export sales generally linked this to support from the weaker exchange rate, alongside successful efforts to enter new overseas markets. At the same time, survey respondents noted that falling domestic demand, especially for investment goods, had driven the overall decline in workloads at the end of 2015.

Staffing levels were reduced again in December, with the pace of job cuts accelerating to the fastest recorded since the survey began in October 2010. Anecdotal evidence suggested that lower payroll numbers reflected a lack of new work to replace completed projects and, in some cases, panel members also cited intense pressure on operating margins. 

Lower workloads resulted in sustained efforts to reduce inventory holdings during December. Pre-production stocks and finished goods inventories both fell during the latest survey period, albeit at a slower pace than in November. Input buying decreased for the sixth month running, which contributed to the least marked deterioration in supplier performance for two-and-a-half years.

Meanwhile, average prices charged by Canadian manufacturers decreased at a moderate pace in December, which marked the first reduction since August 2013. Anecdotal evidence suggested that strong competition for new work had resulted in renewed price discounting at the end of 2015. At the same time, overall input price inflation eased sharply to its weakest since January, despite continued upward pressure on costs from the weaker exchange rate.

Regional highlights include:

  • Alberta and British Columbia experienced by far the sharpest deterioration in business conditions
  • Ontario continued to buck the national trend, recording a sustained rise in manufacturing output 
  • Lower levels of manufacturing employment were recorded in all regions except Ontario

“December’s survey findings indicate that the Canadian manufacturing sector faced another difficult month, with overall business conditions deteriorating at a survey-record pace as falling domestic sales continued to bite,” said Cheryl Paradowski, president and chief executive officer, SCMA. “Another slight rebound in export order volumes was the main positive development at the end of 2015. The weaker loonie is supporting manufacturers as they look to enter new export markets, but rising manufacturing sales abroad have not yet been able to offset falling workloads from domestic sources and the energy sector in particular.”

The report is available at

For further information, please contact:

Royal Bank of Canada
Romina Mari, Manager, Corporate Communications, Canada
RBC Capital Markets
Telephone: +001-416-974-3558

Supply Chain Management Association
Cheryl Paradowski, President and CEO
Telephone +001-416-542-9120

Amanda Cormier, Director, Public Affairs & Communications,
Public Affairs & Communications
Telephone +001-416-542-3860

Tim Moore, Senior Economist
Telephone +44-1491-461-067

Joanna Vickers, Corporate Communications
Telephone +44-207-260-2234

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 by company workforce size 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

About RBC
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RBC helps communities prosper, supporting 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

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

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


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.