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RBC PMI™ Signals A Further Improvement In Business Conditions During April

TORONTO, May 1, 2014 /CNW/ - April data pointed to another positive month for the Canadian manufacturing sector, with the latest survey pointing to higher levels of output, new business and employment, 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.

Adjusted for seasonal influences, the headline RBC PMI registered 52.9 in April, down slightly from 53.3 in March but above the neutral 50.0 value for the thirteenth successive month. All five component indices had a positive influence on the RBC PMI in April. The drop in the index since March mainly reflected slower rates of output and new business growth.

Nevertheless, supply chain disruptions persisted, leading to longer delivery times and another rise in backlogs of work. Meanwhile, manufacturers noted that input costs were pushed up by the weaker Canadian dollar, which in turn contributed to a solid increase in factory gate charges during the latest survey period.

"Though we saw a slight dip in April, it is encouraging to see Canada's manufacturing sector continued to grow for what is now the thirteenth month in a row," said Craig Wright, senior vice-president and chief economist, RBC. "Our bottom line continues to be that a strengthening U.S. economy alongside a more competitive Canadian dollar will support improving conditions for Canada's manufacturers 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 April survey include:

  • Output expanded in April, but at a slower pace than in the previous month.
  • Job creation hit a five-month high.
  • There was a sharp rise in average cost burdens.

Manufacturers in Canada signalled that growth in production eased for the second month running in April and was slightly slower than the average since the survey began in late 2010. The moderation in output growth reflected a slight slowdown in the pace of new business expansion in April.

Volumes of new work from abroad increased only marginally in April and the rate of expansion eased over March. Companies that reported a rise in new export orders generally cited exchange rate depreciation and stronger underlying demand from the U.S.

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