Purchasing Managers' Index
RBC PMI rises to 15-month high in September,
suggesting a solid manufacturing expansion in Canada
RBC Canadian Manufacturing PMI
- Canada's manufacturing sector rises to 15-month high
October 1, 2013 - Canada's manufacturing expansion
accelerated to a 15-month high in September, according to
the RBC Canadian Manufacturing Purchasing Managers’
Index™ (RBC PMI™). 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.
The seasonally adjusted RBC PMI - a composite indicator
designed to provide a single-figure snapshot of the health
of the manufacturing sector - rose to 54.2 in September, up
from 52.1 in August. This indicated further improvement in
manufacturing business conditions, with the rate of growth
above the series average and the fastest since June 2012.
The RBC PMI found that both output and new order growth
accelerated in September. In particular, the latest rise in
total new work intakes was strong and the fastest since June
2012. This partly reflected the greatest increase in new export
orders for two-and-a-half years. Meanwhile, the rate of job
creation also quickened to a 15-month high, as firms hired
additional staff to handle increased business activity.
"The global economy is gaining traction, and, with
that, we are seeing increasing demand for Canadian exports
- particularly from the manufacturing sector, which has contributed
to the PMI reaching a 15-month high in September," said
Craig Wright, senior vice-president and chief economist,
RBC. "While challenges in the sector remain, this
rebound is encouraging. An anticipated strengthening in global
economic growth, particularly in the U.S. which is Canada's
largest trading partner, bodes well for manufacturing activity
late this year and early next."
The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices and supplier delivery times.
Key findings from the September survey include:
- strongest rise in new orders since June 2012;
- employment increases at fastest rate for 15 months; and
- average selling prices rise for first time since May.
Incoming new work at Canadian manufacturers increased for
the sixth consecutive month in September. Moreover, the rate
of new order growth was strong and the fastest in 15
months. Firms generally cited new product launches, as well
as greater demand, both domestically and in key export markets
such as the United States. Concurrently, new export orders
rose at the sharpest rate for two-and-a-half years in September.
Firms raised production in light of higher new order
volumes. Output rose solidly over the month, and at the fastest
rate since May. Nevertheless, outstanding business
increased for the first time in four months and at the strongest
pace for two years, while stocks of finished goods
were broadly the same as in August.
The quantity of inputs bought by manufacturing
companies increased for the sixth successive month in September.
The rate of growth was solid and the strongest since August
2012. Stocks of purchases also increased, although
the rate of accumulation was marginal.
Concurrently, suppliers' delivery times lengthened
further in the latest survey period, with panellists suggesting
that vendors were generally busier and had leaner inventories.
Overall, the latest increase in lead times for inputs was
solid and the greatest for 15 months.
Employment growth in the Canadian manufacturing
sector accelerated to a 15-month high in September. Approximately
17 per cent of firms hired additional staff since August,
and generally attributed this to increased business activity.
Manufacturers faced higher input prices in September,
with raw materials and transportation costs having increased
over the month. That said, the overall rate of inflation eased
slightly since August and was weaker than the series average.
Firms passed on higher costs to clients by raising their selling
prices. On average, output charges rose moderately
and for the first time since May.
Regional highlights include:
- Manufacturing business conditions improved across all
four regions, led by Alberta and British Columbia.
- New orders increased in Ontario, reversing a reduction
one month previously.
- Alberta and British Columbia recorded the
strongest rate of employment growth.
- Quebec saw the weakest increase in input prices
"After a prolonged period of weakness, the Canadian
manufacturing sector appears to be back on track with the
RBC PMI rising above its series average to a 15-month high",
said Cheryl Paradowski, president and chief executive
officer, SCMA. "The main driver of the expansion was
an increase in new orders, which in itself reflected the greatest
rise in new export work since March 2011. Production levels
were insufficient to fully meet new order requirements, with
backlogs of work rising at the sharpest rate for two years."
The report is available at www.rbc.com/newsroom/pmi.
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For further information, please contact:
Royal Bank of Canada
Head of Communications, Canada
RBC Capital Markets
Communications Manager, Canada
RBC Capital Markets
Supply Chain Management Association
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
from Markit. Please contact:
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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,
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