December RBC mfg index hits 3-month low

Jan. 2, 2015 – Business conditions at Canadian manufacturing companies continued to improve at the end of the year, with output and new orders rising further, according to the latest RBC Canadian manufacturing Purchasing Managers’ Index (PMI). Companies hired additional workers and increased their buying activity in order to meet higher demand, it found, adding that cost inflation remained relatively weak by historical standards, while factory gate prices increased at the sharpest rate in seven months.

The PMI slipped from November’s 55.3 to a three-month low of 53.9 in December, suggesting that operating conditions improved at a slightly weaker rate, it noted.

A measure of 50 or above indicates the Canadian manufacturing sector is expanding.

“The PMI continues to register improvement in manufacturing business conditions, though it finished the year slightly lower than the last few months – at 53.9 – indicating some moderation in the pace of improvement in December,” said Paul Ferley, assistant chief economist, RBC. “Despite the recent fluctuation in commodity prices, particularly for oil, we continue to be constructive on the overall economic environment in Canada, including exports, which should mean good things for manufacturing going forward.”

The previous month’s index matched 12-month highs set in October and November 2013.

Published by RBC, Supply Chain Management Association and Markit, the index is based on data compiled from questionnaires sent to purchasing executives in more than 400 industrial companies. It tracks, new orders, output, employment, suppliers’ delivery times and stock of items purchased.

— With files from the Canadian Press