TORONTO, Aug. 4, 2015 /CNW/ - The latest RBC PMI survey
highlighted sustained expansion of production and new business
volumes in July, which underpinned an improvement in operating
conditions for the second month running. . Increased export sales
continued to support the manufacturing sector rebound, though the
overall speed of recovery slowed from the six-month high recorded
in June.
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 manufacturing sector.
At 50.8 in July, the seasonally adjusted RBC
Canadian Manufacturing PMI dipped from June's six-month high of
51.3 but remained above the neutral 50.0 threshold. The latest
reading was still stronger than the average for 2015 so far (49.9),
and signaled a marginal upturn in manufacturing sector business
conditions.
"The RBC PMI indicates a second consecutive month of
improving business conditions in July though still at a very modest
pace and slightly below that achieved in June,"
said Paul Ferley assistant
chief economist, RBC. "As we enter the second half the year, a
strengthening U.S. economy and weaker Canadian dollar
should provide a greater boost to exports and business
conditions for manufacturers."
The headline RBC PMI reflects changes in output,
new orders, employment, inventories and supplier delivery
times.
Key findings from the July survey included:
- RBC Canadian Manufacturing PMI remained above the crucial 50.0
no-change mark
- Output growth moderated from June's six-month high
- Renewed fall in employment levels
A modest increase in production volumes kept the
headline index above the critical 50.0 no-change mark in July.
Manufacturing output has now expanded for three months running,
which firms mainly linked to a slight rebound in client
spending.
July data pointed to a marginal increase in
overall new business volumes; however, the rate of expansion was
unmoved from the marginal pace recorded in June. A further modest
upturn in new export work continued to boost manufacturers' order
books. Anecdotal evidence mainly cited stronger demand from U.S.
clients, helped in part by the weaker exchange rate. Manufacturers
of consumer goods, especially those in the automotive sector,
generally pointed to improving inflows of new work. That said, a
number of manufacturers in the investment goods sector suggested
that lower energy sector capital spending remained a drag on
growth.
Despite rising levels of production and new work
in July, the latest survey pointed to a renewed fall in staffing
numbers across the manufacturing sector as a whole. Survey
respondents that lowered their payroll numbers mostly pointed to
the non-replacement of voluntary leavers in response to excess
capacity. Backlogs of work meanwhile decreased for the eighth
consecutive month in July, which is the longest continuous period
since the survey began in October
2010.
Manufacturers in Canada remained cautious in terms of their
inventory holdings in July, as highlighted by further slight falls
in pre-production stocks and finished goods inventories. However,
the latest reductions were slower than those recorded in June.
Meanwhile, suppliers' lead-times continued to lengthen during July,
which some manufacturers attributed to reduced stock holdings at
vendors.
On the prices front, the latest survey
highlighted a robust and accelerated increase in average cost
burdens across the manufacturing sector. The rate of input price
inflation was the fastest for three months, with a number of
manufacturers noting higher prices for imported components and raw
materials. Increased cost burdens in turn contributed to the most
marked rate of factory gate price inflation since February.
Regional highlights include:
- Ontario recorded the fastest
upturn in overall manufacturing sector conditions in July
- Alberta and British Columbia remained the worst performing
region…
- …but the latest deterioration in operating conditions was the
least marked since February
- Manufacturing jobs growth was strongest in Ontario, followed by Quebec
"July's survey highlights another steady
upturn in manufacturing production and new order volumes, which
leaves the sector well placed to remain on a recovery footing
through the third quarter of 2015" said Cheryl Paradowski, president and chief executive
officer, SCMA. "Exchange rate depreciation and stronger U.S.
consumer spending continue to help shore up demand for Canadian
manufactured goods, in turn offsetting some of the momentum lost
from weaker energy sector spending patterns."
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 is
Canada's largest bank, and one of
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, insurance, investor services
and capital markets products and services on a global basis. We
employ approximately 78,000 full- and part-time employees who serve
more than 16 million personal, business, public sector and
institutional clients through offices in Canada, the U.S. and 39 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 2014, we contributed more than $111 million to causes worldwide, including
donations and community investments of more than $76 million and $35
million in sponsorships.
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.
About Markit
Markit is a leading global diversified provider of financial
information services. We provide products that enhance
transparency, reduce risk and improve operational efficiency. Our
customers include banks, hedge funds, asset managers, central
banks, regulators, auditors, fund administrators and insurance
companies. Founded in 2003, we employ approximately 4,000 people in
11 countries. Markit shares are listed on NASDAQ under the symbol
MRKT. For more information, please see www.markit.com.
About PMI
Purchasing Managers' Index™ (PMI™) surveys are now available
for over 30 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 are owned by or licensed
to Markit. 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 either registered trade marks of Markit Economics
Limited or are licensed to Markit Economics Limited. RBC uses the
above marks under licence. Markit is a registered trade mark of
Markit Group Limited.
SOURCE Markit
Image with caption: "RBC Canadian Manufacturing PMI(TM) (CNW
Group/Markit)". Image available at:
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