Index provides snapshot of Canadian manufacturing sector's health
June 3, 2011
by By Michael Power
Toronto: The Purchasing Management Association of Canada (PMAC) has partnered with global financial information services company Markit, and the Royal Bank of Canada to launch the monthly RBC Canadian Manufacturing Purchasing Managers’ Index.
The PMI is a composite indicator designed to provide a single-figure snapshot of the health of the country’s manufacturing sector. The index will be released the first day of each month and tracks changes in: output; new orders; employment; inventories; prices and supplier delivery times. Index readings above 50 signal expansion from the previous month, while lower readings indicate a contraction.
“For us, the overarching reason for being involved is that one of PMAC’s core mandates is to promote the strategic value that supply chain managers contribute both to their enterprises and to the Canadian economy as a whole,” said PMAC president and CEO Cheryl Paradowski, during the launch of the index in Toronto. “For us, the PMI does an excellent job of enhancing the profile of purchasing and supply chain management decisions.”
PMAC played a role in helping Markit to recruit and develop the survey population, with a “significant proportion” of those surveyed being PMAC members, Paradowski noted.
The headline PMI registered 54.8 in May, down from 56.3 in April. The latest reading posted above the 50 no-change level that separates growth from contraction and signaled an improvement in business conditions for the eighth month in a row. Key findings from the survey include:
• The PMI fell for the second month running;
• There was a rise in employment but at a slower rate than the previous month; and
• Suppliers’ delivery times lengthened further as vendors struggled to source raw materials.
Business conditions in the Canadian manufacturing sector improved at a slower pace in May, the index said, showing weaker expansion of output and new orders. However, job creation remained solid and similar to that registered during the previous survey period. Suppliers’ delivery times lengthened further, while input prices rose at a marked rate during May.
About 23 percent of those surveyed reported a deterioration. Respondents suggested vendors struggled to source certain raw materials in May, particularly as global supply chains were disrupted in the aftermath of the Japanese earthquake.
Click here to view the index online.