RBC PMI™ rises to 15-month high in September, suggesting a solid
manufacturing expansion in Canada
TORONTO, Oct. 1, 2013 /CNW/ - Canada's manufacturing expansion accelerated to
a 15-month high in September, 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 Supply Chain Management Association (SCMA), the RBC PMI
offers a comprehensive and early indicator of trends in the Canadian
The seasonally adjusted RBC PMI - a composite indicator designed to provide a
single-figure snapshot of the health of the manufacturing sector - rose to
54.2 in September, up from 52.1 in August. This indicated further improvement
in manufacturing business conditions, with the rate of growth above the series
average and the fastest since June 2012.
The RBC PMI found that both output and new order growth accelerated in
September. In particular, the latest rise in total new work intakes was strong
and the fastest since June 2012. This partly reflected the greatest increase
in new export orders for two-and-a-half years. Meanwhile, the rate of job
creation also quickened to a 15-month high, as firms hired additional staff to
handle increased business activity.
"The global economy is gaining traction, and, with that,we are
seeingincreasing demand for Canadian exports - particularly from
themanufacturing sector, whichhascontributed to thePMI reaching
a15-month high in September," said Craig Wright, senior vice-president and
chief economist, RBC. "While challenges in the sector remain, this rebound is
encouraging. An anticipatedstrengthening inglobaleconomic growth,
particularly in the U.S. which is Canada's largest trading partner,bodes
well for manufacturing activity late this year and early next."
The headline RBC PMI reflects changes in output, new orders, employment,
inventories, prices and supplier delivery times.
Key findings from the September survey include:
-- strongest rise in new orders since June 2012;
-- employment increases at fastest rate for 15 months; and
-- average selling prices rise for first time since May.
Incoming new work at Canadian manufacturers increased for the sixth
consecutive month in September. Moreover, the rate of new order growth was
strong and the fastest in 15 months. Firms generally cited new product
launches, as well as greater demand, both domestically and in key export
markets such as the United States. Concurrently, new export orders rose at the
sharpest rate for two-and-a-half years in September.
Firms raised production in light of higher new order volumes. Output rose
solidly over the month, and at the fastest rate since May. Nevertheless,
outstanding business increased for the first time in four months and at the
strongest pace for two years, while stocks of finished goods were broadly the
same as in August.
The quantity of inputs bought by manufacturing companies increased for the
sixth successive month in September. The rate of growth was solid and the
strongest since August 2012. Stocks of purchases also increased, although the
rate of accumulation was marginal.
Concurrently, suppliers' delivery times lengthened further in the latest
survey period, with panellists suggesting that vendors were generally busier
and had leaner inventories. Overall, the latest increase in lead times for
inputs was solid and the greatest for 15 months.
Employment growth in the Canadian manufacturing sector accelerated to a
15-month high in September. Approximately 17 per cent of firms hired
additional staff since August, and generally attributed this to increased
Manufacturers faced higher input prices in September, with raw materials and
transportation costs having increased over the month. That said, the overall
rate of inflation eased slightly since August and was weaker than the series
average. Firms passed on higher costs to clients by raising their selling
prices. On average, output charges rose moderately and for the first time
Regional highlights include:
-- Manufacturing business conditions improved across all four
regions, led by Alberta and British Columbia.
-- New orders increased in Ontario, reversing a reduction one
-- Alberta and British Columbia recorded the strongest rate of
-- Quebec saw the weakest increase in input prices in September.
"After a prolonged period of weakness, the Canadian manufacturing sector
appears to be back on track with the RBC PMI rising above its series average
to a 15-month high", said Cheryl Paradowski, president and chief executive
officer, SCMA. "The main driver of the expansion was an increase in new
orders, which in itself reflected the greatest rise in new export work since
March 2011. Production levels were insufficient to fully meet new order
requirements, with backlogs of work rising at the sharpest rate for two years."
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
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 firstname.lastname@example.org.
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About Supply Chain Management Association
As the leading and largest association in Canada for supply chain management
professionals, the Supply Chain Management Association (SCMA) is the national
voice for advancing and promoting the profession. SCMA sets the standard of
excellence for professional skills, knowledge and integrity and was the first
supply chain association in the world to require that all members adhere to a
Code of Ethics.
With nearly 8000 members working across the private and public sectors, SCMA
is the principal source of supply chain training, education and professional
development in the country. Through its 10 Provincial and Territorial
Institutes, SCMA grants the Supply Chain Management Professional (SCMP)
designation, the highest achievement in the field and the mark of strategic
supply chain leadership.
SCMA was formed in 2013 through the amalgamation of the Purchasing Management
Association of Canada and Supply Chain and Logistics Association of Canada.
With a combined history of more than 140 years, today the association embraces
all aspects of strategic supply chain management, including:
purchasing/procurement, strategic sourcing, contract management,
materials/inventory management, and logistics and transportation. For more
information, please visit scmanational.ca.
Markit is a leading, global financial information services company with over
3,000 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 markit.com.
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 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.email@example.com Elyse Lalonde, Communications Manager,
Canada RBC Capital Markets Telephone +001-416-842-5635
Emailelyse.firstname.lastname@example.org Supply Chain Management Association Cheryl
Paradowski, President and CEO Telephone +001-416-542-9120
Emailcparadowski@scmanational.ca Cori Ferguson, Director, Public
Affairs & Communications Telephone +001-416-542-9129
Markit Mark Wingham, Economist Telephone +44-1491-461-004
Emailmark.email@example.com Rachel Harling, Corporate Communications
Telephone +001-917-441-6345 / +001-646-351-3584
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