Production and new order growth strengthens in September

The volume of new work received by Canadian manufacturers continued to increase in September

December 1, 2011
by Purchasingb2b Staff

Purchasingb2b print edition: October 2011

The volume of new work received by Canadian manufacturers continued to increase in September, according to the RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI).

The index found conditions in Canada’s manufacturing sector improved in September. Output and new order growth quickened, with panelists noting greater demand and new client wins. The job creation rate was strong and the fastest since March. But supply-side pressures increased as firms reported vendor delivery delays and a strong but slower input price inflation rate.

The headline RBC PMI registered 55 in September—up slightly from August’s 54.9—signaling solid improvement in manufacturing conditions. The reading was the highest since April, reflecting further expansions of output and new orders.

The survey tracks changes in output, new orders, employment, inventories, prices and supplier delivery times. Index readings above 50 signal expansion, while readings below show contraction. Key findings from the survey include:
• fastest output increases since April;
• strong rise in new work intakes; and
• job creation quickens to six-month high.

The latest expansion partly reflected more new work, the survey indicated, with over a third of respondents reporting new order growth. Export orders rose in September.

Manufacturing companies raised production, and firms depleted stocks of finished goods in September to partly fulfill new order requirements. Work backlogs increased, although the latest rise was weaker than August.

Employment in Canada’s manufacturing sector rose in September, with almost 21 percent of firms hiring more staff. Job creation quickened since the previous survey, the fastest in six months.

Inputs purchased by surveyed firms also increased. Meanwhile, input inventories were depleted for the first time since April.

Monitored companies reported higher input prices in September, reflecting increased costs for certain raw materials. The rate of input price inflation remained strong, despite easing further from April’s peak. Firms passed on greater cost burdens to clients by raising their output charges during the survey period. But the latest rise in factory gate prices was moderate and the weakest in 11 months. Regional highlights from the survey include:
• manufacturing sector business conditions improved in all four broad Canadian regions in September (led by Alberta and BC );
• Alberta and BC registered the fastest new order growth rate;
• Quebec recorded job losses in September. Employment fell only marginally; and
• Input costs increased the most in Alberta and BC.