Purchasing Managers' Index
RBC PMI signals only slight growth of
output and new orders in January
RBC Canadian Manufacturing Purchasing
Managers' Index - Canada's manufacturing sector
registers marginal improvement in January
February 1, 2013 The RBC Canadian Manufacturing
Purchasing Managers' Index (RBC PMI)
pointed to only marginal increases in both output and new
orders in January; however, this marks the first rise in production
levels since last October. A monthly survey, conducted in
association with Markit, a leading global financial information
services company, and the Purchasing Management Association
of Canada (PMAC), the RBC PMI offers a comprehensive
and early indicator of trends in the Canadian manufacturing
The headline RBC PMI - a composite indicator
designed to provide a single-figure snapshot of the health
of the manufacturing sector - signalled only a marginal improvement
in Canadian manufacturing business conditions in January.
At 50.5, the RBC PMI was only slightly higher than the survey-low
of 50.4 recorded in both November and December.
The RBC PMI found that output increased for
the first time in three months in January, albeit only slightly,
but new order growth slowed since December and was only marginal.
The rate of job creation also weakened, easing to a 12-month
low, while the rate of input price inflation strengthened
to its fastest since last September.
"The Canadian manufacturing sector experienced a
relatively lacklustre start to the New Year amid ongoing global
economic uncertainty," said Craig Wright, senior
vice-president and chief economist, RBC. "As some of
the more extreme downside risk scenarios look less likely
now, we should see confidence in the global economy improve,
paving the way for a stronger recovery in Canadian manufacturing."
In addition to the headline
RBC PMI, the survey also tracks changes in output,
new orders, employment, inventories, prices and supplier delivery
Key findings from the January survey include:
- RBC PMI only slightly higher than the survey lows reported
in November and December;
- output increases for first time in three months, albeit
only marginally; and
- slowest rate of job creation in 12 months.
Although the volume of new orders received by Canadian
manufacturers rose further in January, with one-in-four panellists
reporting an increase since December, the rate of growth was
only marginal. Firms generally cited weak client demand. New
export orders, meanwhile, were broadly unchanged in the
latest survey period, but this was nonetheless an improvement
from the declines recorded in the previous two months.
After having fallen for two consecutive months, manufacturing
production increased in January. However, output growth
was only slight. Meanwhile, stocks of finished goods
decreased at the sharpest rate since last July, and backlogs
of work fell solidly and for the fourth month running.
Reflective of higher output requirements, the quantity
of inputs bought by manufacturers increased in January.
Purchasing activity rose modestly, but growth remained weaker
than the series average. Input inventories, meanwhile,
fell for the third consecutive month and at the strongest
rate in a year.
Suppliers' delivery times lengthened further in the
latest survey period. Panellists suggested that the combination
of low inventories and capacity issues at suppliers contributed
to the latest deterioration in vendor performance.
Employment in Canada's manufacturing sector increased
in January, taking the current sequence of job creation to
12 months. However, the rate of growth has slowed continually
since reaching a peak last May, with the latest expansion
Firms reported higher input costs in January, with
raw materials such as resin, chemicals and metals particularly
mentioned as having increased in price. Overall, the rate
of inflation was the strongest in four months, but slower
than the series average. Companies passed greater costs on
to clients by raising their charges, but selling prices
nonetheless rose at a weaker pace than costs overall.
- Manufacturing business conditions in both Alberta
and British Columbia and Ontario improved
- Reduced levels of new business only posted in Quebec,
with growth signalled elsewhere.
- Strongest rate of job creation recorded by manufacturers
- All four regions recorded faster rates of input price
inflation in January, with the strongest rise posted in
Alberta and British Columbia.
"The January RBC PMI rose only slightly from the survey
low recorded at the end of last year, with the improved reading
partly reflective of a return to marginal growth for manufacturing
output," said Cheryl Paradowski, president and chief
executive officer, PMAC. "Meanwhile, new order and employment
expansion rates both weakened over the month, with the rate
of job creation, in particular, the slowest since January
The report is available at www.rbc.com/newsroom/pmi.
- 30 -
For further information, contact:
Royal Bank of Canada
Head of Communications, Canada
RBC Capital Markets
Communications Manager, Canada
RBC Capital Markets
Purchasing Management Association of Canada
President and CEO
Director, Public Affairs & Communications
Telephone +001-917-441-6345 / +001-646-351-3584
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
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
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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
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significant institutional participants in the financial marketplace.
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