RBC PMI signals slower downturn in business conditions in March

Apr. 2, 2015 – The RBC Canadian Manufacturing Purchasing Managers’ Index (RBC PMI) indicated a further downturn in business conditions across the Canadian manufacturing sector in March, though the rate of contraction moderated from the survey-record-low in February.

The indicator came in at 48.9 for the month, up by a hair from 48.7 in February. A reading less than 50.0 on the index indicates contraction.

This represents the first back-to-back deterioration in overall business conditions in the survey’s four-and-a-half year history. Moreover, the average reading for Q1 as a whole (49.5) is the weakest since the survey began in late 2010, noted the survey.

“With a second consecutive reading below 50, the RBC PMI is signalling that Canada’s manufacturing sector continues to face headwinds,” said Craig Wright, senior vice-president and chief economist, RBC. “We remain confident that as the U.S. economy continues to strengthen and the Canadian dollar becomes more competitive, there will be an uptick in exports, a good sign for manufacturers — we need some time to see this materialize.”

Output, new business and employment levels all fell at slower rates than in the previous month. Manufacturers, nonetheless, signalled a solid reduction in work-in-hand (but not yet completed), and inventory levels were reduced again amid concerns about the outlook for client demand.