Ontario a bright spot in generally bleak Canadian mfg sector: RBC

Jun. 5, 2015 – The latest RBC Canadian Manufacturing Purchasing Managers’ Index (RBC PMI) finds that manufacturing production grew in May, ending a three-month period of back-to-back declines. A stabilization in export orders provided support to the manufacturing sector during the latest survey period, although overall volumes of new work continued to decrease, it notes.

Meanwhile, input cost inflation eased to its lowest since January, despite widespread reports that exchange rate depreciation contributed to upward pressure on imported raw material prices.

At 49.8 in May, up slightly from 49.0 in April, the PMI reached its highest level since January, but still signalled a fractional deterioration in overall business conditions. A modest increase in production levels was the main positive influence on the headline index in May.

A reading less than 50.0 on the index indicates contraction.

While Canada’s manufacturing sector is still feeling the impact of the oil and gas downturn, the index finds there are signs of improvement in Ontario, which is benefitting from a weaker dollar and brighter prospects for the U.S. market, according to feedback from the industry’s purchasing managers.

RBC says confidence has risen in Ontario (rising to 55.5 from 54.0 in May). The index remained very weak in the Alberta-British Columbia region at 43.2 in May, up from 42.0 in April, but the regional indexes for other parts of the country are in positive territory and there are signs the upward momentum will continue with the help of a strong U.S. dollar.

— With files from David Paddon, The Canadian Press