RBC PMI™ signals moderate manufacturing expansion in June, with ongoing growth of output and new orders

RBC PMI™ signals moderate manufacturing expansion in June, with ongoing 
growth of output and new orders 
TORONTO, July 2, 2013 /CNW/ - The Canadian manufacturing sector continued to 
expand in June, with sustained growth in output, new orders and employment, 
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 - suggested a 
moderate improvement in Canadian manufacturing business conditions in June. At 
52.4, the headline index remained above the 50.0 no-change mark and was at the 
second-highest level since last September, despite a dip from 53.2 in May. 
The RBC PMI signalled ongoing growth of both output and new orders in June. 
Although having eased since May, the latest expansions were nonetheless 
stronger than those registered at the beginning of the year. Reflecting 
increased new work, manufacturers continued to add to their workforces, hiring 
staff at a faster rate than the series average. Meanwhile, a stronger rise in 
input costs added pressure to margins, especially as output charges were 
unchanged from one month earlier. 
"Canada's manufacturing sector continued to expand in June - a sign that the 
slowdown earlier this year was in fact a temporary blip," said Craig Wright, 
senior vice-president and Chief Economist, RBC. "Movinginto the second half 
of2013,an anticipated strengtheningininternational demand willhelp 
the sectorshake off its relatively lacklustre performanceit has recorded 
over the pastyear." 
The headline RBC PMI reflects changes in output, new orders, employment, 
inventories, prices and supplier delivery times. 
Key findings from the June survey include: 


    --  both output and new orders increase solidly, but at weaker
        rates;
    --  suppliers' delivery times shorten for first time in 33-month
        series history; and
    --  rate of input price inflation accelerates to three-month high.

Manufacturers received a larger volume of new orders in June, and generally 
attributed this to greater client demand. New export work also rose over the 
month, with firms particularly mentioning an increase in new orders from 
Europe. Overall, total new order growth was solid, but slower than the 
11-month peak recorded in May.

Firms raised their production levels and depleted stocks of finished goods in 
light of higher new order requirements. Output increased for the second 
consecutive month in June, with the latest rise broadly in line with the 
series average. Meanwhile, backlogs of work fell, but the reduction mostly 
reversed an increase in May.

Concurrently, the quantity of inputs bought by manufacturing companies rose 
further during June. Stocks of purchases were meanwhile broadly the same as in 
May, with two-in-three panellists reporting no change in input inventories.

For the first time in the 33-month series history, lead times for inputs fell 
during June. A number of survey respondents suggested that vendors were less 
busy and were actively reducing the amount of work-in-hand. Nonetheless, 
suppliers' delivery times shortened only marginally.

Manufacturing employment in Canada continued to rise in June, with one-in-five 
surveyed firms hiring additional staff since May. Anecdotal evidence linked 
job creation to the recent expansion in new orders. Overall, the rate of 
employment growth was solid, but slightly weaker than the nine-month high 
recorded in the previous survey period.

Input costs faced by manufacturers increased in June, with higher raw material 
prices, particularly for steel, commonly reported by panellists. The rate of 
inflation was the strongest in three months, but remained weaker than the 
series average. Meanwhile, firms left their output charges unchanged from May. 
This ended a 14-month sequence of increases.

Regional highlights include:
    --  Manufacturing business conditions improved in three out of the
        four Canadian regions, with the exception of Alberta and
        British Columbia.
    --  Manufacturers in Quebec reported a strong rise in output during
        June.
    --  Manufacturing employment was largely unchanged in Alberta and
        British Columbia, but rose elsewhere.
    --  Ontario posted the weakest rise in input prices in June.

"Despite having eased since May, the Canadian manufacturing sector continued 
to grow moderately in June, representing an improvement from the marginal 
expansion registered at the beginning of the year. In fact, the average RBC 
PMI reading for Q2 was the highest since Q3 2012," said Cheryl Paradowski, 
president and chief executive officer, PMAC. "A further rise in new orders, 
partly reflecting greater client demand, continued to support growth of output 
and employment in June."

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, 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 44 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: "Canada's manufacturing sector continued to expand in June 
(CNW Group/RBC)". Image available at:  
http://photos.newswire.ca/images/download/20130702_C4423_PHOTO_EN_28643.jpg

SOURCE: RBC

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

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


 
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