Purchasing Managers' Index
RBC PMI November manufacturing output
increases at fastest pace since March 2011
RBC Canadian Manufacturing PMI
- Canada's manufacturing conditions improve strongly in
December 2, 2013 - Business conditions in Canada's
manufacturing sector continued to improve strongly in November,
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
The seasonally adjusted RBC PMI - a composite indicator
designed to provide a single-figure snapshot of the health
of the manufacturing sector - registered 55.3 in November,
signalling a strong improvement in Canada's manufacturing
business conditions. Although the headline index was down
slightly from October's 55.6, it was consistent with one of
the fastest rates of growth for over two years.
The RBC PMI showed that a marked rise in new order
volumes, partly reflective of new client wins, supported the
strongest increase in output since March 2011. Concurrently,
firms hired additional staff in November, although the rate
of employment growth eased to a four-month low. On the price
front, inflationary pressures remained muted with the latest
rise in input costs, in particular, weaker than October's
"Canadian manufacturing conditions continued to be
quite favourable in November, although we saw a slight dip
compared to the gains
the sector made in October," said Craig Wright, senior
vice-president and chief economist, RBC. "While the
U.S. government budget impasse negotiations did not come to
a firm resolution, recent reports suggest that the fourth-quarter
hit to U.S. growth will be limited following a solid gain
in the third quarter. A slow and steady increase in U.S. growth
will play a big role in setting the stage for a continuation
in the recent momentum we have seen in Canadian manufacturing
activity over the past few months."
The headline RBC
PMI reflects changes in output, new orders, employment,
inventories, prices and supplier delivery times.
Key findings from the November survey include:
- marked rates of output and new order growth;
- rate of job creation eases to four-month low; and
- input price inflation remains subdued.
Incoming new work at Canadian manufacturers continued to
rise markedly in November. Although the rate of new order
growth eased slightly over the month, it was one of the fastest
since data collection began in October 2010. Firms generally
cited greater client demand and new contract wins, including
from the United States. Consequently, new export orders
rose for the eighth consecutive month.
Firms raised production in light of larger new order
requirements. Notably, the rate of output growth was marked
and the second-fastest in the 38-month series history (on
par with March 2011). Concurrently, stocks of finished
goods increased in November, more than reversing a reduction
in October, and backlogs of work rose for the third
consecutive month, albeit marginally.
Meanwhile, the quantity of inputs bought by Canadian manufacturing
firms rose strongly and at a pace only slightly weaker than
October's 25-month peak. The increase in purchasing activity
was partially used to rebuild inventories, with stocks
of purchases rising for the third month running. Greater
demand for inputs was also a factor behind longer suppliers'
delivery times in November. Lead times have increased
in each month since July.
Manufacturing employment in Canada rose for the twenty-second
consecutive month in November. However, the overall rate of
job creation slowed to a four-month low that was also weaker
than the series average.
Input prices faced by Canadian manufacturing companies
increased in November, with panellists commonly reporting
higher prices for steel and fuel. Nevertheless, the rate of
inflation eased to a moderate pace that was slower than the
series average. Firms partially passed on their higher costs
to clients by raising their selling prices. Although output
charges increased for the third consecutive month, the
latest rise was only marginal.
- Business conditions improved across all four Canadian
regions. Alberta & British Columbia saw the strongest
improvement over the month.
- Alberta & British Columbia posted the fastest
rise in new orders.
- Ontario saw no change in exports, but this was
an improvement from a reduction one month previously.
- Manufacturing employment was little-changed in Quebec.
"The Canadian manufacturing sector remained strong
as we approach the year end. Higher domestic and export orders
supported further growth acceleration for output, and also
encouraged firms to start rebuilding their inventories,"
said Cheryl Paradowski, president and chief executive officer,
SCMA. "The Employment Index was a disappointing result
from the survey, having showed the rate of job creation ease
to a four-month low, but perhaps this will pick up if the
strong performance of the sector continues."
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
Public Affairs & Communications
Telephone +44-207-260-2047 / +44-7815-812-162
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:
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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, please visit scmanational.ca.
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Purchasing Managers' Index (PMI) surveys
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to provide up-to-date, accurate and often unique monthly indicators
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RBC Canadian Manufacturing PMI provided herein is owned by
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