Manufacturing output stagnates, despite a marginal rise in new orders in April: RBC PMI™

Manufacturing output stagnates, despite a marginal rise in new orders in 
April: RBC PMI™ 
TORONTO, May 1, 2013 /CNW/ - The RBC Canadian Manufacturing Purchasing 
Managers' Index™ (RBC PMI™) suggests that the Canadian manufacturing 
sector stagnated in April - an improvement from the contraction observed in 
March. 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 - registered 
50.1 in April and, posting only slightly above the 50.0 no-change mark, 
signalled broadly no change in overall manufacturing business conditions. 
However, the PMI nonetheless rose from a survey-low of 49.3 in March, which 
was consistent with a modest deterioration in operating conditions. 
The RBC PMI found that manufacturing output levels in April were largely the 
same as March, despite the volume of new orders having increased, albeit only 
marginally. Employment was also little-changed, seeing only a slight rise in 
staff numbers since March. On the price front, the rates of increase for both 
input costs and output charges eased, with the rate of input price inflation, 
in particular, the slowest in nine months. 
"Canada's manufacturing sector kept its head above water in April, registering 
some improvement over the surprising series low recorded last month," said 
Craig Wright, senior vice-president and chief economist, RBC. "While the 
overall gains made in April were tepid, we expect manufacturing output to 
pick-up, augmenting export activity andsupportingCanada's growth 
The headline RBC PMI reflects changes in output, new orders, employment, 
inventories, prices and supplier delivery times. 
Key findings from the April survey include: 

    --  Output levels largely unchanged in April, following a reduction
        in March;
    --  marginal rise in total new work; and
    --  slowest rate of input price inflation since July 2012.

Incoming new work at Canadian manufacturers increased in April, with firms 
generally linking this to greater demand. Although the rate of growth was only 
marginal and weaker than the series average, it was nonetheless in contrast 
with a reduction in March. Overall, the rise in total new work also reflected 
larger volumes of new export orders, which rose at the strongest rate in six 
months during April.

Despite higher new order requirements, production levels were largely the same 
as one month previously. The stagnant output trend in April nevertheless 
follows a decline in March. Meanwhile, stocks of finished goods were 
accumulated for the first time in 2013 to date, albeit marginally, and 
backlogs of work continued to fall for the seventh consecutive month.

The quantity of inputs bought by manufacturers was also broadly the same as in 
the previous survey period, rising only fractionally over the month. Stocks of 
purchases, meanwhile, were depleted for the sixth consecutive month in April, 
and at the joint-fastest rate since January 2012.

Suppliers' delivery times continued to lengthen in April, with approximately 
seven per cent of panellists reporting a deterioration in vendor performance. 
That said, the latest increase in lead times was the weakest since last 

After adjusting for seasonal variation, manufacturing employment in Canada was 
largely unchanged in April. The corresponding index fell further from 
February's four-month peak and was the second-lowest since data collection 
began in October 2010.

In April, manufacturers reported the weakest rise in cost burdens since July 
2012. The modest increase in costs nonetheless partly reflected higher prices 
for raw materials, packaging and transportation. Firms passed on greater costs 
to clients by raising their selling prices. Output charges rose at a rate in 
line with the series average that was also stronger than the increase in input 

Regional highlights include:
    --  Solid falls in manufacturing output were recorded for Alberta
        and British Columbia and Ontario.
    --  Following a deterioration in March, manufacturing business
        conditions in Quebec improved during April.
    --  Manufacturers in Quebec saw the strongest rise in new export
        work in April.
    --  Employment growth was recorded in two of the four regions, with
        the strongest increase posted in Quebec.

"Despite the RBC PMI rising from a survey low in March, it was much weaker 
than the series average and suggests that the Canadian manufacturing sector 
stagnated in April," said Cheryl Paradowski, president and chief executive 
officer,PMAC. "A return to growth for new orders, partly reflecting a modest 
rise in new export work, may lead to an increase in production over the coming 
months. In the meantime, manufacturers' profitability is protected to some 
extent by output charges rising at a faster rate than input costs."

The report is available at

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

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 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

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

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

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 

Purchasing Management Association of Canada

Cheryl Paradowski, President and CEO Telephone +001-416-542-9120  Cori Ferguson, Director, Public Affairs & 
Communications Telephone +001-416-542-9129 

Markit  Mark Wingham, Economist Telephone +44-1491-461-004  Rachel Harling, Corporate Communications 
Telephone +001-917-441-6345 / +001-646-351-3584  

Image with caption: "RBC Canadian Manufacturing PMI™ - Canada's 
manufacturing output slightly improves in April (CNW Group/RBC)". Image 
available at:


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CO: Purchasing Management Association of Canada
ST: Ontario

-0- May/01/2013 13:30 GMT

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