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RBC PMI™ Signals Expansion In September, But At Weakest Pace In Six Months

TORONTO, Oct. 1, 2012 /CNW/ - Growth of Canada's manufacturing sector lost further momentum in September, with the weakest pace of expansion recorded since March, 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 - registered 52.4 in September, which is evidence of a modest expansion in Canada's manufacturing industry. However, having fallen from 53.0 in August, the rate of growth was the slowest for six months. The weaker performance of the sector was further highlighted by the quarterly average PMI reading falling from 54.3 in the three months to June, to 52.8 in the three months to September.

The RBC PMI signalled that both output and new orders increased during September, partly reflecting greater client demand. The rates of growth eased since August, however, with the latest expansion in production the second-weakest in the two-year survey history. The rate of job creation also eased, slowing to a five-month low. Inflationary pressures meanwhile picked up in September, with input prices rising strongly since August.

"All things considered, particularly within the context of the relatively weak global economic and manufacturing data, the fact that Canada's manufacturing sector continues to expand is noteworthy," said Craig Wright , senior vice-president and chief economist, RBC. "While it hasn't been entirely smooth sailing for Canada's broader economy in recent months, continued business spending and improving labour market conditions, among other generally positive factors, will help set the stage for GDP growth of 2.1 per cent in 2012."

In addition to the headline RBC PMI , the survey also tracks changes in output, new orders, employment, inventories, prices and supplier delivery times.

Key findings from the September survey include:
  • growth of output and new orders slows to eight- and six-month lows respectively;
  • moderate rise in employment, but rate of job creation weakest since April; and
  • input prices increase strongly over the month.

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