RBC Purchasing Managers’ Index continues decline
Weaker global conditions and ongoing spending cuts in the energy sector to blame.
TORONTO — Manufacturers saw a further decline of output, new orders and employment in October, according to RBC’s Canadian Manufacturing Purchasing Managers’ Index (PMI) survey results. But better days are coming!
“As we move toward the end of the year, we expect a strengthening US economy and weaker Canadian dollar will fuel demand for Canada’s exports, resulting in a shift to positive growth territory,” said Craig Wright, RBC’s senior vice-president and chief economist.
However, October registered the sharpest rate of deterioration since the survey began in October 2010. The index posted 48.0, down from 48.6 in September and below the neutral 50.0 threshold for the third month in a row.
Survey respondents blamed weaker global conditions and ongoing spending cuts in the energy sector for the decline, which included new export sales for the first time since April. Input costs also rose sharply, putting pressure on operating margins and contributing to a further slight increase in factory gate charges.
Manufacturers indicated a modest reduction in their payroll numbers, continuing a trend seen throughout much of the year.
Supplier delivery times lengthened, as has now been the case for almost two-and-a-half years. Purchasing executives suggested international shipping delays, alongside capacity cuts among local suppliers, had led to longer lead times for inputs.
The survey identified overall cost burdens rising at the second-fastest pace since July 2014. Manufacturers overwhelmingly linked higher input costs to exchange rate depreciation against the US dollar.
The RBC PMI report is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 industrial companies. It’s conducted in association with Markit, and the Supply Chain Management Association (SCMA).
Click here for the report.