Canadian manufacturing business conditions deteriorate for first time in two-and-a-half years: RBC PMI™

Canadian manufacturing business conditions deteriorate for first time in 
two-and-a-half years: RBC PMI™ 
TORONTO, April 2, 2013 /CNW/ - The March RBC Canadian Manufacturing Purchasing 
Managers' Index™ (RBC PMI™) signalled the first deterioration in 
manufacturing business conditions since data collection began in October 2010, 
with monthly declines reported for both output and new orders. 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 - fell below 
the 50.0 no-change mark that separates growth from contraction in March. This 
was the first sub-50 reading in the two-and-a-half year survey history. At 
49.3, down from 51.7 in February, the RBC PMI was consistent with a marginal 
rate of contraction in March. 
The RBC PMI found that both the levels of output and new orders were lower in 
March compared with one month previously. A number of firms linked this to 
weak client demand. The reduced workloads also contributed to a slower rate of 
job creation. Meanwhile, on the price front, the rate of input cost inflation 
was strong and faster than in February, but remained slower than the series 
average. 
"The deterioration in the Canadian manufacturing measure is surprising in the 
face of improving growth in both the U.S. and various emerging economies. 
However, uncertainty about resolving fiscal imbalances in the U.S.- with 
sequestration going ahead March 1- and in the Euro-area may have weighed on 
sentiment," saidCraig Wright, senior vice-president and chief economist, 
RBC. "This weak spot should be short-lived, however, as we expect that global 
demand for Canadian exports will recover, providing a welcome boost for 
domestic manufacturers." 
The headline RBC PMI reflects changes in output, new orders, employment, 
inventories, prices and supplier delivery times. 
Key findings from the March survey include: 


    --  RBC PMI falls below the 50.0 no-change mark that separates
        growth from contraction;
    --  both output and new orders fall modestly in March; and
    --  employment growth slows.

Canadian manufacturers received a lower volume of new orders in March. Firms 
generally linked the reduction to weak client demand, both at home and abroad, 
with new export work also having fallen since February. Although moderate, the 
rate of decline in total new orders was the sharpest in the 30-month series 
history.

Reflective of lower new work intakes, manufacturing firms reduced their output 
in the latest survey period. Production has fallen in three out of the past 
five months, with the latest reduction moderate. Concurrently, stocks of 
finished goods were depleted, albeit only marginally, and backlogs of work 
fell further and at a faster rate than one month previously.

Following no change in purchasing volumes in February, the quantity of inputs 
bought by manufacturers fell in March. However, the rate of decline was only 
slight. Input inventories, meanwhile, fell for the fifth successive month, 
partly reflecting leaner stock holding requirements.

Suppliers' delivery times lengthened further in March. Anecdotal evidence 
suggested that vendors were working with lower inventories, with some 
suppliers also experiencing transportation problems. Overall, the increase in 
lead times was modest, but to a lesser extent than in February.

Manufacturing employment in Canada continued to increase in March. However, 
the rate of growth eased since hitting a four-month high in February. 
Approximately 14 per cent of firms hired additional staff in the latest survey 
period, while 10 per cent reduced their workforces.

Input costs faced by manufacturers rose further in March, with higher raw 
material prices and unfavourable exchange rates contributing to the latest 
increase. Overall, the rate of input price inflation was strong and faster 
than in February. Meanwhile, output charges also increased over the month, 
with the latest rise the greatest for almost a year.

Regional highlights include:
    --  Three regions saw a deterioration in manufacturing business
        conditions in March. The rates of contraction were moderate in
        both Alberta and British Columbia and Ontario, but marginal in
        Quebec.
    --  Production fell at the sharpest rate in Alberta and British
        Columbia.
    --  The strongest rate of contraction in new orders was recorded in
        Ontario.
    --  Job losses were reported in Alberta and British Columbia, but
        employment growth was recorded elsewhere.

"The Canadian manufacturing sector took a turn for the worse in March, seeing 
a deterioration in overall operating conditions for the first time in the 
survey's two-and-a-half year history," said Cheryl Paradowski, president and 
chief executive officer,PMAC. "Highlighting weak demand both domestically 
and in key export markets, manufacturers reported month-over-month declines in 
output and new orders in March, and they responded by scaling back hiring."

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 
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 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 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.

RBC supports a broad range of community initiatives through donations, 
sponsorships and employee volunteer activities. In 2012, we contributed more 
than $95 million to causes worldwide, including donations and community 
investments of more than $64 million and $31 million in sponsorships.

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 
2,800 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 
Emailmark.wingham@markit.com

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

Image with caption: "RBC PMI: Canada's manufacturing conditions deteriorated 
in March for first time in survey history (CNW Group/RBC)". Image available 
at:  
http://photos.newswire.ca/images/download/20130402_C9204_PHOTO_EN_24914.jpg

SOURCE: RBC

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CO: Purchasing Management Association of Canada
ST: Ontario
NI: FIN ECO ECOSURV 

-0- Apr/02/2013 13:30 GMT


 
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