Aug. 1, 2013 /CNW/ - Manufacturing business conditions in
Canada improved for the fourth consecutive month in July; however, the rate of growth was modest and the weakest in three months, 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.
At 52.0, the headline
RBC PMI - a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector - remained above the 50.0 no-change mark for the fourth successive month in July, signalling a further improvement in Canadian manufacturing business conditions. However, down from 52.4 to a three-month low, the headline index indicated a modest expansion that was weaker than the series average.
RBC PMI indicated ongoing growth of both output and new orders in July, with firms generally attributing this to greater client demand and new product launches. However, the rates of growth eased to three-month lows and this contributed to a weaker rise in employment. Meanwhile, firms reduced their output charges for the first time since
March 2012, often linking discounting to stronger competitive pressures.
" Canada's manufacturing sector stayed afloat in July, although conditions were slightly less favourable than on average historically," said Craig Wright , senior vice-president and chief economist, RBC. "We expect the U.S. economy to shift into higher gear in the second half of the year, slowly increasing demand for Canada's exports, and manufacturing goods in particular - this is good news for overall GDP growth."
headline RBC PMI
reflects changes in output, new orders, employment, inventories, prices and supplier delivery times.
Key findings from the July survey include:
- modest increases in both output and new orders;
- weakest rate of job creation since April; and
- average selling prices fall at strongest pace in near three-year series history.
The volume of
received by Canadian manufacturers increased for the fourth consecutive month in July. Firms generally linked this to greater client demand, in part due to new product launches, with
new export work
also rising over the month. Though remaining moderate overall, the rate of total new order growth was the weakest since April.
Reflective of the latest increase in new work, manufacturers raised
and depleted existing
stocks of finished goods
. That said, the latest rise in production was the weakest in the current three-month sequence. Meanwhile,
backlogs of work
fell solidly and for the second month running.
Concurrently, the quantity of
by manufacturing companies increased during the latest survey period. Although this mostly reflected higher new orders, part of the rise in purchasing volumes was also used to build input inventories.
Stock of purchases
rose for the first time since
, albeit only marginally.
Suppliers' delivery times
lengthened in July, after having shortened slightly in June. Nonetheless, the deterioration in vendor performance was only modest and weaker than the series average.
manufacturing sector continued to rise in July. Approximately 17 per cent of surveyed firms hired additional staff over the month, often linking this to increases in new business. Overall, the rate of job creation was moderate, but slowed further from May's peak to the weakest in three months.
Manufacturers faced greater
in July, with higher raw material prices and unfavourable exchange rates behind the latest increase. Overall, the rate of inflation was moderate and the fastest since March. In contrast, companies reduced their
from June, with a number of firms citing stronger competitive pressures. The reduction in selling prices was modest and the first for almost a year-and-a-half.
"The Canadian manufacturing sector remained in expansion mode at the start of the second half of the year, with greater demand supporting ongoing growth of new orders and output," said Cheryl Paradowski , president and chief executive officer, PMAC. "However, the manufacturing expansion still remains fragile, as indicated by the RBC PMI falling to a three-month low that was lower than the series average."
- Alberta and British Columbia was the only region to see deterioration in manufacturing business conditions in July, although this was only slight.
- Manufacturers based in Ontario saw a marginal reduction in new order volumes.
- Employment increased in three regions during July, with the only exception being Alberta and British Columbia that saw broadly no change from June.
- The weakest rise in input costs was recorded for Quebec .
The report is available at
Notes to Editors:
The RBC Canadian Manufacturing
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'.
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