Manufacturing growth held steady in October despite continuing uncertainty in the global economy, according to the RBC Canadian Manufacturing Purchasing Managers Index.
TORONTO: Manufacturing growth held steady in October despite continuing uncertainty in the global economy, according to the RBC Canadian Manufacturing Purchasing Managers Index.
Output and new orders continued to increase solidly but at slower rates rate, with firms citing greater demand and new customers, although new orders fell “modestly” since September.
The RBC PMI, conducted in association with Markit, a global financial information services company and the Purchasing Management Association of Canada (PMAC), posted a 53.7 composite score in October, down from 55.0 the previous month.
“The Canadian manufacturing sector has been weathering external macro events and market conditions reasonably well, and we expect to see modest economic growth for the remainder of the year,” said Craig Wright, senior vice-president and chief economist at RBC.
Key findings from the October survey include:
• Incoming new work and production both increased solidly, albeit at a weaker pace
• The rate of job creation eased since September
• Inflationary pressures weakened further
Firms generally linked the improvement in business conditions to new order growth in October. Almost 30% of the companies registered larger volumes compared with September. However, the rate of growth was the weakest since July, with a modest decline in new export orders.
The index shows production increasing “robustly” but at a slower pace with backlogs falling and stocks of finished goods reducing further, in some cases to meet higher new order requirements. Input levels also increased for the month but inventories were depleted for the second consecutive month, with a number of respondents citing leaner stock holding policies. Subsequently, suppliers’ delivery times lengthened further in October, as input demand strengthened. But the increase in lead times was the weakest in the 13-month series history.
Employment also rose. Approximately 22% of survey respondents raised staffing levels, while 14% reduced headcounts.
Higher input costs were recorded in October with fuel and raw materials such as metals leading the way. Firms passed on greater cost burdens to clients by raising their selling prices, although output charges rose only modestly.
The RBC Canadian Manufacturing PMI Report is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 industrial companies.