Purchasing Managers' Index
MARKET SENSITIVE INFORMATION
RBC Canadian Manufacturing Purchasing Managers'
Index finds weaker growth of output and new orders
Newly launched index, conducted in association with Purchasing
Management Association of Canada, offers an early trends indicator
for Canadian manufacturing sector
June 2, 2011 Royal Bank of Canada (RBC),
in association with Markit, a leading, global financial information
services company, and the Purchasing Management Association
of Canada (PMAC), today launched the monthly RBC Canadian
Manufacturing Purchasing Managers' Index (RBC PMI),
a comprehensive and early indicator of trends in the Canadian
manufacturing sector. The RBC PMI will be released on the
first business day of each month.
In addition to the headline
RBC PMI - a composite indicator designed to provide
a single-figure snapshot of the health of the manufacturing
sector - the survey also tracks changes in output, new orders,
employment, inventories, prices and supplier delivery times.
Index readings above 50.0 signal expansion from the previous
month, readings below 50.0 indicate contraction.
Key findings from this month's survey include:
- PMI fell for second consecutive month.
- Robust rise in employment, but at a slower rate than the
- Suppliers' delivery times lengthened further as vendors
struggled to source raw materials.
Business conditions in the Canadian manufacturing sector
improved at a slower pace in May. This reflected weaker expansion
of both output and new orders. However, job creation remained
solid and broadly similar to that registered during the previous
survey period. Suppliers' delivery times lengthened further,
while input prices rose at a marked rate during May.
"The overall index fell slightly during May with
declines evident across most of the key components and across
all of the regions," said Craig Wright, Senior
Vice President and Chief Economist, RBC. "This aligns
with our outlook for a moderation in Canadian economic growth
in the second quarter of the year after a robust start to
The headline RBC PMI registered 54.8 in May, down
from 56.3 in April. Nevertheless, the latest reading posted
above the 50.0 no-change level that separates growth from
contraction and signalled an improvement in overall business
conditions for the eighth month running.
Canadian manufacturers received a larger amount of new
orders during May, although the rate of expansion eased.
Anecdotal evidence attributed new order growth to greater
demand from both domestic and international markets. Panellists
particularly highlighted the U.S. as a key source of new export
order wins in May.
Surveyed firms correspondingly increased their output
in May. Manufacturers have now raised production levels for
eight consecutive months. However, output growth weakened
to a slower rate during the latest survey period.
Reflective of new order growth being stronger than that of
output, the amount of outstanding work increased fractionally
during May. The rate of accumulation was partially limited
by firms depleting stocks of finished goods.
Employment in the Canadian manufacturing sector increased
solidly during the latest survey period, with over one-fifth
of respondents expanding their workforces. That said, the
rate of growth was down slightly from the previous month.
Anecdotal evidence from the survey panel suggested that firms
added to their workforces as production requirements rose
Similarly, surveyed firms purchased a greater quantity
of inputs in May. A number of respondents commented that
this reflected further output growth and efforts to boost
Supplier lead times lengthened at a marked pace in
May, with around 23 per cent of surveyed firms reporting a
deterioration. Respondents suggested that vendors struggled
to source certain raw materials in May, particularly as global
supply-chains were disrupted in the aftermath of the Japanese
Monitored companies indicated that a wide range of inputs
increased in price during May. Steel and oil were particularly
mentioned by panellists. Firms passed part of their greater
cost burdens on to clients by raising output prices,
but the rate of inflation remained slower than that of input
costs. Although still strong, the rates of inflation of both
input and output charges eased during May.
- Regional manufacturing business conditions improved across
all four monitored broad regions in May. PMI data indicated
the strongest improvement was in Alberta and British
- Manufacturers based in Quebec recorded the fastest
rate of new order growth.
- Meanwhile, Alberta and British Columbia
posted the strongest rate of job creation in May.
- Ontario registered the largest increase in input
costs during May. Similarly, monitored companies based in
this region also raised their output prices the most.
"The Canadian manufacturing sector grew at a weaker
rate in May, as growth of new orders received by surveyed
firms eased. Nevertheless, panellists attributed the latest
increase in new orders to greater global demand," said
Cheryl Paradowski, President and Chief Executive
Officer, PMAC. "Meanwhile, supply pressures such as longer
delivery times and higher input prices persisted in May."
The report is available at
- 30 -
For further information, contact:
Royal Bank of Canada
Director, Media Relations
RBC Capital Markets
Head of Communications, Canada,
RBC Capital Markets
Purchasing Management Association of Canada
President and CEO
Telephone +44-20-7260-2047 / +44-781-581-2162
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 Standard Industrial Classification
(SIC) group, based on the industry contribution to 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 do 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
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries
operate under the master brand name RBC. We are Canada's largest
bank as measured by assets and market capitalization, and
among 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, corporate and investment
banking and transaction processing services on a global basis.
We employ approximately 79,000 full- and part-time employees
who serve close to 16 million personal, business, public sector
and institutional clients through offices in Canada, the U.S.
and 50 other countries. For more information, please visit
About Purchasing Management Association of Canada
The Purchasing Management Association of Canada (PMAC) is
the leading, and the largest, association in Canada for supply
chain management professionals. With 7,000 members working
across private and public sectors, PMAC is the principal source
of supply chain training, education and professional development
in the country, requiring all members to adhere to a Code
of Ethics. Through its 10 Provincial and Territorial Institutes,
PMAC grants the SCMP (Supply Chain Management Professional)
designation, the highest achievement in the field and the
mark of strategic leadership. For more information please
Markit is a leading, global financial information services
company with over 2,200 employees. The company provides independent
data, valuations and trade processing across all asset classes
in order to enhance transparency, reduce risk and improve
operational efficiency. Its client base includes the most
significant institutional participants in the financial marketplace.
For more information, see www.markit.com.
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 www.markit.com/economics.
The intellectual property rights to the RBC Canadian Manufacturing
PMI provided herein is owned by 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 trade marks
of Markit Economics Limited, RBC uses the above marks under
licence. Markit and the Markit logo are registered trade marks
of Markit Group Limited.