Manufacturing sector rebounds in June to highest level this year: RBC report
Numbers are in line with an improvement in economic growth to about a 2% pace during Q2.
TORONTO — The Royal Bank says its manufacturing index shot up to the highest level in a year last month, an encouraging sign for Canada’s slow-growth economy.
The purchasing managers’ index rose to 53.5 in June, up from 52.2 the previous month an 52.9 in April, with stronger output and new orders providing the biggest boost.
“The latest RBC PMI data indicates that in June, Canada’s manufacturers experienced the best conditions for growth in half a year,” said Craig Wright, senior vice-president and chief economist at RBC.
“We expect that those conditions will further improve going forward supported by a strengthening global economy, increases in external demand for domestic goods and a depreciating Canadian dollar.”
RBC says the manufacturing numbers are in line with other indicators pointing to an improvement in economic growth to about a 2% pace during the second quarter.
The weather-influenced first quarter had produced only a 1.2% growth rate in Canada, which was still considerably stronger to the shrinkage experienced in the US during the first three chilly months of 2014.
Other elements in the report were also broadly encouraging, says RBC.
New export orders inched up after falling in May, while the backlogs of work and the quantity of purchase indexes also rose.
Also encouraging for Canada’s near-term economic prospects was a new report from Washington pointing to strong jobs growth in the month of June, with private sector employers adding 281,000 workers during the month.
The fly in the ointment, however, is that the Canadian dollar continues to strengthen on currency markets and is approaching 94 cents US, which could suppress the export-dependent manufacturing sector going forward.
© 2014 The Canadian Press