RBC PMI™ signals only marginal improvement in manufacturing business conditions in November

RBC PMI™ signals only marginal improvement in manufacturing business 
conditions in November 
RBC's Craig Wright says economic weak patch to be short lived 
TORONTO, Dec. 3, 2012 /CNW/ - The RBC Canadian Manufacturing Purchasing 
Managers' Index™ (RBC PMI™) signalled that Canada's manufacturing sector 
grew only marginally in November. 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 - fell from 
51.4 to 50.4 in November, and indicated the weakest rate of manufacturing 
growth since data were first available in October 2010. 
The fall in the RBC PMI partly reflected incoming new work remaining broadly 
unchanged from October and the first contraction in output in 26 months of 
data collection. Manufacturers generally cited weak market conditions. 
Nevertheless, firms continued to hire additional staff in November, although 
the rate of job creation was only modest and the slowest since April. 
"Minimal growth in the manufacturing sector in November likely reflects the 
continued global economic uncertainty and the time-lagged impact of other 
indicators suggesting that the Canadian economy weakened during the third 
quarter," said Craig Wright, senior vice-president and chief economist, RBC. 
"We expect the economic weak patch to be short lived, however. As the downside 
risks plaguing the global economy start to ease, so will some of the weight on 
Canadian export demand and the broader manufacturing sector." 
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 November survey include: 

    --  RBC PMI falls to lowest level in 26 months of data collection;
    --  output declines in November, while new orders broadly unchanged
        from October; and
    --  rate of job creation at seven-month low.

The volume of new orders received by Canadian manufacturers was broadly 
unchanged from October, with panellists largely linking this to weak market 
conditions. New export orders meanwhile fell modestly and for the first time 
since February.

The flat new orders trend was one of the factors behind a fall in production 
during November. This was the first reduction in output in 26 months of data 
collection, but the rate of decline was only marginal. Stocks of finished 
goods, meanwhile, were depleted, in contrast to accumulation one month 
previously, and backlogs of work fell sharply and for the second month running.

Reflective of lower output requirements, the quantity of inputs bought by 
manufacturing firms fell during the latest survey period. Stocks of purchases 
were also reduced, with a number of panellists attributing this to leaner 
inventory requirements.

Suppliers' delivery times nonetheless lengthened further in November, with 
approximately 11 per cent of firms reporting increased lead times since 
October. Respondents suggested that suppliers were working with less stock and 
that some vendors were also affected by Hurricane Sandy.

Manufacturing employment in Canada increased for the tenth consecutive month 
in November. Where higher staffing levels were reported, firms commented on 
replacing employees who had recently left. However, the rate of job creation 
was only modest and the slowest since April.

Firms reported a further rise in cost burdens during the latest survey period, 
with this largely reflective of higher raw material prices. That said, the 
rate of input price inflation was the weakest in three months and slower than 
the series average. Manufacturers' selling prices also increased in November 
as panellists passed on greater costs to clients. Despite having quickened 
since October, the latest increase in output prices remained modest overall.

Regional highlights include:
    --  Alberta and British Columbia and Ontario were the only Canadian
        regions to post improved manufacturing operating conditions in
    --  New orders fell in three regions, with only Ontario recording
        an increase in new work since October.
    --  The strongest rate of employment growth was posted in Alberta
        and British Columbia.
    --  Input prices rose at the fastest rate in Alberta and British
        Columbia, while the slowest increase was recorded in Quebec.

"November was one of the most difficult months for Canadian manufacturers in 
the past two years, with RBC PMI data showing a month-over-month fall in 
production and new order growth grinding to a halt. This reflected weaker 
domestic and export market conditions," said Cheryl Paradowski, president and 
chief executive officer,PMAC. "Nonetheless, firms continued to hire 
additional staff, although the rate of job creation slowed for the sixth month 
running and was only modest."

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 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, investor services and wholesale banking 
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 49 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 Emailgillian.mcardle@rbc.com

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™ Manufacturing 
conditions marginally improve in November (CNW Group/RBC)". Image available 


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CO: Markit
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-0- Dec/03/2012 14:30 GMT

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