Purchasing managers index reports job creation rate strongest since November
Operating conditions in Canada’s manufacturing sector strengthened in March, according to the RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI), a monthly survey with financial information company Markit and PMAC. The index looks at trends in the Canadian manufacturing sector.
The headline RBC PMI—a composite indicator that looks at the manufacturing sector—registered 52.4 in March, up from 51.8 in February, signaling a modest improvement in Canadian manufacturing business conditions. Index readings above 50 signal expansion, below 50 show contraction. The index found new orders and output increased further in March, showing greater client demand. But production growth was the second-weakest in the 18-month survey history. Job creation was at a four-month high, while the price inflation rate eased since February. The survey also tracks changes in output, new orders, employment, inventories, prices and supplier delivery times. Key findings from March include:
Firms generally linked the latest improvement to greater client demand. Incoming new work rose modestly in March, the strongest rise in three months. New export orders increased fractionally over the month, in contrast to declines in January and February. Canadian manufacturers raised production during the latest survey period. Output has increased each month since data collection began, but the latest rise was the second-weakest in this sequence of growth. Stocks of finished goods also depleted to help fulfill new order requirements, while backlogs of work fell moderately overall.
The amount of inputs purchased increased in March, albeit marginally and at the weakest pace in the 18-month series history. Input inventories were depleted for the seventh consecutive month. Several panelists cited leaner stock holding policies. Suppliers’ delivery times also lengthened further in March. Anecdotal evidence suggested vendors struggled to meet greater demand for inputs. Manufacturing employment rose solidly in March, with about one-fifth of respondents hiring more staff (while 11 percent reduced their workforces). The overall job creation rate was the strongest since last November.
Canadian manufacturers reported higher input costs in March, with fuel, steel and resin particularly mentioned. Although the rate of input price inflation remained strong, it was nonetheless the weakest in three months. Meanwhile, firms reduced their selling prices, largely commenting on stronger competitive pressures. This was the first reduction in factory gate prices in 18 months of data collection.
Regional highlights include: