RBC PMI™ points to only marginal improvement in manufacturing business conditions as output stagnates in December

RBC PMI™ points to only marginal improvement in manufacturing business 
conditions as output stagnates in December 
TORONTO, Jan. 2, 2013 /CNW/ - The RBC Canadian Manufacturing Purchasing 
Managers' Index™ (RBC PMI™) indicated only a marginal rise in new order 
volumes and broadly no change in output in December. 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 - remained at 
50.4 for the second month running in December, signalling only a marginal 
improvement in manufacturing operating conditions. The RBC PMI, meanwhile, 
averaged 50.7 over the fourth quarter as a whole, down from 52.8 in the third 
quarter and was the lowest quarterly reading since data collection began in 
October 2010. 
The RBC PMI found that new orders increased in December, partly reflecting 
greater demand and new product launches, but output levels were broadly 
unchanged from November. Meanwhile, employment continued to increase, but the 
rate of job creation was at an 11-month low and input prices rose at the 
slowest pace since July. 
"A weak global economy and a strong loonie have weighed somewhat on the 
broader sector and contributed to a flat PMI reading compared to November," 
said Craig Wright, senior vice-president and chief economist, RBC. "That said, 
as the cloak of uncertainty is removed from the global economy in the coming 
months related to fiscal policy in the U.S. and elsewhere, we expect that 
demand for Canadian exports will rise, as will investment and hiring across 
the economy." 
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 December survey include: 

    --  RBC PMI remains at lowest reading since data collection began
        in October 2010;
    --  output broadly unchanged from November, while new orders
        increase only marginally; and
    --  slowest rate of employment growth since January.

Canadian manufacturers received a larger volume of new orders in December, 
after broadly no change in November. Firms commented on greater client demand 
and the launch of new products. That said, the rate of growth was only 
marginal, with new export work falling for the second month running.

Despite the rise in new orders, output was broadly unchanged from one month 
earlier. Nonetheless, the flat production trend was an improvement from a 
modest reduction in the previous survey period. Concurrently, backlogs of work 
were depleted at a marked pace and stocks of finished goods rose, albeit the 
rate of inventory accumulation was only marginal.

Employment in Canada's manufacturing sector increased further during December, 
with approximately 14% of firms hiring additional staff since November. Job 
creation has been reported in each month since February, but was the weakest 
in this sequence of growth.

A marginal increase in the quantity of purchases was reported by respondents 
in the latest survey period. That said, input inventories were depleted and at 
the strongest rate since January 2012.

Suppliers' delivery times lengthened further in December, with panellists 
commenting on raw material shortages and transportation delays, particularly 
with international vendors. However, the latest increase in lead times was 
only modest and the weakest in the 27-month series history.

Manufacturers reported a fifth successive monthly rise in input costs in 
December. Although the rate of inflation was solid, it was nonetheless the 
slowest in the current sequence of price increases. Firms passed greater costs 
on to clients by raising their output charges. Nonetheless, average selling 
prices rose only modestly and at the weakest rate since July.

Regional highlights include:
    --  Manufacturing business conditions improved in Alberta and
        British Columbia and Ontario in December.
    --  The strongest rate of new order growth was posted in Ontario.
    --  Job creation was reported in Alberta and British Columbia and
        Ontario, while job losses were reported elsewhere.
    --  Quebec posted the slowest rate of input price inflation in

"The headline RBC PMI index indicated only a marginal improvement in 
manufacturing business conditions in December, with output largely stagnating 
and new orders increasing only marginally from November," said Cheryl 
Paradowski, president and chief executive officer,PMAC. "Both the Output and 
New Orders indices showed improved trends in the latest survey, but the 
remaining three components of the PMI have deteriorated. In particular, the 
Employment Index pointed to the weakest rate of job creation in 11 months."

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 Purchasing Managers' Index™: 
manufacturing activity rises marginally in December, matching November's pace 
(CNW Group/RBC)". Image available at:  


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CO: Purchasing Management Association of Canada
ST: Ontario

-0- Jan/02/2013 14:30 GMT

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