MRO Magazine

April’s manufacturing output and new order growth accelerates

Toronto, ON -- Canadian manufacturing business conditions in April 2012 improved to the greatest extent in 2012 so far, according to the RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI), a monthly survey, conducted in association...


Toronto, ON — Canadian manufacturing business conditions in April 2012 improved to the greatest extent in 2012 so far, according to the RBC Canadian Manufacturing Purchasing Managers Index (RBC PMI), a monthly survey, conducted in association with Markit, a global financial information services company, and the Purchasing Management Association of Canada (PMAC). The survey offers a comprehensive and early indicator of trends in the Canadian manufacturing sector.

The headline RBC PMI – a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector – signalled a solid improvement in Canadian manufacturing business conditions in April. At 53.3, up from 52.4 in March, the PMI was the highest in four months, but nonetheless remained below the average for the series.

The RBC PMI found that both output and new orders increased in April, with firms generally citing greater client demand. Notably, new export orders grew solidly and at the fastest pace for a year. Canadian manufacturers hired additional staff in April; however job creation was the slowest in three months. The rate of input price inflation was the strongest since last August.

“Favourable manufacturing conditions have been a prevailing force in Canada so far this year thanks, in part, to strong output and new export order growth in particular which accelerated in April at the fastest pace in a year,” said Craig Wright, senior vice-president and chief economist, RBC. “As the economy south of the border strengthens, we expect the Canadian manufacturing sector will continue to reap the benefits of increasing US demand for key Canadian exports such as autos, machinery and lumber.”

In addition to the headline RBC PMI, the survey also tracks changes in output, new orders, employment, inventories, prices and supplier delivery times.

Key findings from the April survey include:

– RBC PMI at four-month high, but still below the series trend

– Greater client demand supports further increases in both total and export orders

-Employment growth the weakest in three months.

Firms largely linked improved business conditions to greater client demand and new contract wins in April. Approximately 35% of firms received a larger volume of new orders compared with March, with the rate of growth accelerating to a four-month high.

New work intakes from abroad also increased solidly in April, with new export orders from the US particularly mentioned by survey respondents.

Reflective of the increase in new orders, Canadian manufacturers raised production and depleted stocks of finished goods in April. Output has increased in each month since data collection began in October 2010, with the latest rise the strongest since last December, while inventories of post-production goods declined for the tenth month running. Concurrently, backlogs of work were broadly unchanged since March.