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RBC PMI™ Hits Three-month High In March Driven By Stronger New Order Gains

Stocks in this article: RY

TORONTO, April 1, 2014 /CNW/ - Solid rates of growth in output and new business were recorded across the Canadian manufacturing sector in 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 Supply Chain Management Association (SCMA), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian manufacturing sector.

At 53.3 in March, up from 52.9 in the previous month, the headline RBC PMI was the highest since December 2013. The index has now registered above the neutral 50.0 value for 12 consecutive months and the latest reading indicated a solid pace of expansion across the manufacturing sector.

New export orders increased at the second-fastest pace since last October but, on a less positive note, there were widespread reports that supply disruptions had led to longer delivery times for raw materials and an associated increase in unfinished work in March. Meanwhile, input cost inflation was the steepest since May 2011, which manufacturers overwhelmingly linked to currency surcharges related to the weakening Canadian dollar.

" Canada's manufacturers have experienced solid conditions for growth in the last year, and March was no different - we saw a nice uptick from a month earlier," said Craig Wright, senior vice-president and chief economist, RBC. "We continue to expect that underlying economic conditions - a strengthening U.S. economy and a weaker Canadian dollar - will lay the foundation for a boost in domestic manufacturing in the near-term."

The headline RBC PMI reflects changes in output, new orders, employment, inventories, prices and supplier delivery times.

Key findings from the March survey include:

  • Solid improvement in business conditions
  • A rebound in exports supported overall new business growth in March
  • A weaker Canadian dollar contributed to further upturn in cost inflation

The rise in the headline RBC PMI was driven by an improvement in new business growth from the six-month low recorded in February. Moreover, the latest increase in new work was the fastest in 2014 to-date. Higher levels of incoming new business partly reflected an acceleration of new export order growth.

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