Purchasing Managers' Index
RBC PMI dips to a nine-month low in
RBC Canadian Manufacturing PMI
- Canadian manufacturing conditions dip to nine month low
February 3, 2014 - January data pointed to a setback
for the manufacturing sector at the start of 2014, 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
Output and new business growth were both the weakest for
five months in January. Meanwhile, staffing levels were reduced
for the first time in two years and manufacturers responded
to the moderation in new order growth by cutting their input
buying and pre-production inventory levels during the latest
Adjusted for seasonal influences, the headline RBC PMI dipped
from 53.5 in December to 51.7 in January. Although the index
remained above the neutral 50.0 value, the latest reading
pointed to the slowest overall improvement in business conditions
since April 2013. All five components of the RBC PMI made
a weaker contribution to the headline index than in the previous
month, led by slower expansions of output and new business
"Canada's manufacturing sector continued to grow
in January, albeit at slower pace than December, registering
at 51.7, down from 53.5," said Craig Wright, senior
vice president and chief economist, RBC. "Underlying
economic conditions - such as stronger growth in the U.S.
economy and a weaker Canadian dollar - remain supportive for
the outlook for domestic manufacturing in the period ahead."
RBC PMI reflects changes in output, new orders, employment,
inventories, prices and supplier delivery times.
Key findings from the January survey include:
- Slowest improvement in business conditions since April
- Latest data indicates slower rates of output and new order
- Employment levels fall for first time in two years.
Production levels in the Canadian manufacturing sector
increased for the ninth successive month, but the rate of
growth was the least marked since last August. Anecdotal evidence
generally suggested that slower output growth reflected softer
rises in demand, especially from domestic sources.
January data pointed to a moderation in total new order
growth, despite an acceleration in export sales. The latest
survey highlighted that new orders from abroad increased at
the most marked pace since September 2013, with some manufacturers
noting improved spending patterns in developed markets.
Weaker growth of overall new work contributed to a drop in
unfinished business for the second month running, although
the rate of decline remained only slight. Meanwhile, a general
lack of pressure on operating capacity led to a marginal decrease
in manufacturing employment levels during January. The reduction
in staffing levels was the first for two years.
Manufacturers in Canada responded to softer new business
growth by cutting their stocks of purchases at the
start of 2014. Latest data signalled the joint-fastest decline
in pre-production inventories for two years.
In line with the drop in input stocks, volumes of purchasing
activity across the manufacturing sector decreased for
the first time in ten months. However, average delivery
times from suppliers continued to lengthen during January.
Worsening vendor performance has been recorded in each month
since July 2013.
Average cost burdens increased in the Canadian manufacturing
sector during January, which extended the current period of
continuous input price inflation to one-and-a-half years.
Latest data indicated a robust and accelerated pace of cost
inflation, with the overall rise in input prices the fastest
since April 2012. Meanwhile, prices charged by manufacturers
in Canada continued to increase in January, and the rate of
inflation reached a three-month high.
- All four regions recorded higher production levels, led
- Quebec registered the slowest rise in new order
- Jobs growth was largely confined to Alberta &
- Robust rises in cost burdens were posted in all four regions
"Canadian manufacturing growth stepped down a gear
at the start of 2014, as highlighted by the slowest rises
in production and new orders for five months," said Cheryl
Paradowski, president and chief executive officer, SCMA.
"Softer gains in new work resulted in the first overall
drop in employment for two years. However, the latest figures
suggest resilient export sales across the manufacturing sector
as new business from abroad picked up at the sharpest rate
since last September.
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,
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company with over 3,000 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 are owned by
or licensed to 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 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.
The intellectual property rights to the RBC Canadian Manufacturing
PMI provided herein are owned by or licensed to 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 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