Subscribe
PurchasingB2B

Purchasing Managers Index holds ground

Both output and new orders increased solidly in October, albeit at slower rates, according to the RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI), a monthly survey, conducted in association with global financial information services company Markit and the Purchasing Management Association of Canada (PMAC).


December 20, 2011
Sandy MacIsaac

Purchasingb2b November/December 2011 print edition

Both output and new orders increased solidly in October, albeit at slower rates, according to the RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI),
a monthly survey, conducted in association with global financial information services company Markit and the Purchasing Management Association of Canada (PMAC).

The index found Canadian manufacturing business conditions improved further in October, with firms attributing higher output and new orders to greater demand and new client wins. Still, the respective rates of growth eased since September as global economic conditions weakened and new export orders fell modestly.

The headline RBC PMI—which provides a snapshot of the manufacturing sector’s health—posted 53.7 in October, down from 55 in September. Readings above 50 signal expansion from the previous month, readings below that show contraction.
Key findings from the October survey include:
• Incoming new work and production both increase solidly at a weaker pace;
• Rate of job creation eases since September; and
• Inflationary pressures weaken further.

Firms generally linked improved business conditions to new order growth in October. Incoming new work rose solidly, with almost 30 percent of monitored companies registering larger new order volumes compared with September. Anecdotal evidence largely attributed the increase to greater demand and new client wins. The rate of growth was the weakest since July, as new export orders fell modestly in October.

Canadian manufacturers raised production during the latest survey period, as has been the case since the start of data collection in October 2010. Output increased robustly, but at a slower pace than September, while backlogs of work fell modestly in October. Stocks of finished goods were reduced further, in some cases to meet higher new order requirements.

Inputs purchased in October increased. Surveyed firms also depleted input inventories for the second month, with many citing leaner stock holding policies. Suppliers’ delivery times lengthened further in October, as input demand strengthened. Still, the latest increase in lead times was the weakest in the 13-month series’s history.

Employment in Canada’s manufacturing sector rose further during the latest survey period. About 22 percent of survey respondents raised staffing levels, while 14 percent reduced headcounts. The rate of job creation was solid, but slower than that registered in September.

Higher input costs were recorded by Canadian manufacturing companies in October. Fuel and raw materials such as metals were particularly mentioned as having increased in price. Although the rate of input price inflation remained solid, it eased sharply from April’s peak. Firms generally passed on greater cost burdens to clients by raising selling prices, while output charges rose modestly. Regional highlights include:
• Data signalled improvement in manufacturing business conditions across all four broad Canadian regions in October. Alberta and British Columbia lead the latest expansion. Those provinces registered the fastest rate of new order growth and the input price inflation; and
• Three among four broad regions reported job creation in October, with Quebec the exception.                           b2b