RBC PMI™ falls to nine-month low, indicating only a modest manufacturing expansion in October

RBC PMI™ falls to nine-month low, indicating only a modest manufacturing 
expansion in October 
TORONTO, Nov. 1, 2012 /CNW/ - Canada's manufacturing sector grew only modestly 
in October, with the rate of expansion the weakest since January, 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 Purchasing Management 
Association of Canada (PMAC), the RBC PMI offers a comprehensive and early 
indicator of trends in the Canadian manufacturing sector. 
The headline RBC PMI - a composite indicator designed to provide a 
single-figure snapshot of the health of the manufacturing sector - posted 51.4 
in October, and was at a level indicative of only a modest expansion in 
Canada's manufacturing sector. Moreover, having fallen from 52.4 in September, 
the rate of growth signalled was the weakest for nine months. 
The RBC PMI pointed to only modest increases in both output and new orders 
during October. In particular, the rate of total new order growth slowed over 
the month, posting the weakest expansion since January, despite a stronger 
rise in new export orders. Meanwhile, input prices continued to increase 
solidly, but the rate of inflation nonetheless remained weaker than the series 
"Canadian manufacturing continued to weaken in October though the PMI measure 
is still indicative of growth in the sector which is in contrast to flat to 
declining activity in most other countries," said Craig Wright, senior 
vice-president and chief economist, RBC. "This weakening may in part be 
related to continuing uncertainty around how fiscal imbalances in the U.S. and 
the Euro area will be resolved. Greater strength in the Canadian manufacturing 
sector may hinge on some of this uncertainty easing as policy measures outside 
of Canada are implemented." 
In addition to the headline RBC PMI, the survey also tracks changes in output, 
new orders, employment, inventories, prices and supplier delivery times. 
Key findings from the October survey include: 

    --  lowest PMI reading since January;
    --  slower rates of output and new order growth; and
    --  input price inflation remains weaker than series average.

The volume of new orders received by Canadian manufacturers increased at the 
weakest pace in nine months in October. Although greater client demand, 
particularly from key export markets such as the U.S. and Asia, contributed to 
the rise in total new orders, the rate of growth was only modest overall.

Manufacturing production also increased at a weaker pace in the latest survey 
period. Output rose only modestly over the month, with the rate of increase at 
a nine-month low. Firms meanwhile accumulated stocks of finished goods for the 
first time since June 2011, and reduced the level of outstanding business at 
the fastest pace since January.

Employment in Canada's manufacturing sector continued to increase in October, 
with one-in-five surveyed firms hiring additional staff since September. 
Greater workloads were often cited by companies as the main factor behind the 
latest rise in employee numbers. However, the rate of job creation was modest 
overall and the slowest for six months.

The quantity of inputs bought by monitored companies increased further in the 
latest survey period, with some of the rise in purchasing volumes being used 
to build stocks. Input inventories have grown for seven consecutive months, 
although the latest expansion was weaker than that registered one month 

Concurrently, suppliers' delivery times lengthened again in October. Anecdotal 
evidence suggested that some vendors had capacity issues in the month. The 
latest increase in lead times was only modest and weaker than the series 

Firms reported that a wide range of raw materials had increased in price in 
October, with resin, fuel and oil-related products particularly highlighted. 
That said, the rate of input price inflation slowed since September and 
remained weak in the context of historical data. The rate of increase for 
output charges also eased over the month, with average selling prices rising 
only modestly from September.

Regional highlights include:
    --  Three out of the four broad Canadian regions saw weaker
        manufacturing expansions in October, with Ontario the only
    --  Incoming new work at manufacturers in Alberta and British
        Columbia fell marginally over the month.
    --  Manufacturing employment in Quebec was broadly unchanged from
        September, but staffing levels rose elsewhere.
    --  The rate of input price inflation slowed in all four regions
        during October.

"Growth of Canada's manufacturing sector slowed further in October, with both 
output and new orders seeing their weakest month-over-month increases since 
January," said Cheryl Paradowski, President and Chief Executive 
Officer,PMAC. "The latest data indicates a stronger expansion of new foreign 
orders, suggesting that soft domestic demand was offset by greater demand in 
key export markets such as the U.S. in October."

The report is available at www.rbc.com/newsroom/pmi

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 

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 economics@markit.com.

About RBC
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 are 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 
investor services on a global basis. We employ approximately 80,000 full- and 
part-time employees who serve more than 15 million personal, business, public 
sector and institutional clients through offices in Canada, the U.S. and 51 
other countries. For more information, please visit rbc.com.

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 see www.pmac.ca.

About Markit
Markit is a leading, global financial information services company with over 
2,500 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.

About PMIs
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.

Royal Bank of Canada Gillian McArdle, Head of Communications, Canada RBC 
Capital Markets Telephone +001-416-842-4231 

Elyse Lalonde, Communications Manager, Canada RBC Capital Markets Telephone 
+001-416-842-5635 Emailelyse.lalonde@rbc.com

Purchasing Management Association of Canada Cheryl Paradowski, President and 
CEO Telephone +001-416-542-9120 Emailcparadowski@pmac.ca

Cori Ferguson, Director, Public Affairs & Communications Telephone 
+001-416-542-9129 Emailcferguson@pmac.ca

Markit Mark Wingham, Economist Telephone +44-1491-461-004 

Rachel Harling, Corporate Communications Telephone +001-917-441-6345 / 
+001-646-351-3584 Emailrachel.harling@markit.com

Image with caption: "RBC Canadian Manufacturing PMI - Falls to nine month low; 
manufacturing expansion weakens in October (CNW Group/RBC)". Image available 


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CO: Purchasing Management Association of Canada
ST: Ontario

-0- Nov/01/2012 13:30 GMT

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