Manufacturing AUTOMATION

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April 2016 PMI shows strongest improvement since Dec. 2014


May 3, 2016 – April data from the latest RBC Canadian Manufacturing Purchasing Managers’ Index (RBC PMI) highlighted a sustained recovery in business conditions across the Canadian manufacturing sector, with growth of output, new orders and employment all accelerating since the previous month.

At the same time, manufacturers pointed to the weakest rate of input price inflation so far in 2016, despite rising demand for raw materials and some reports of renewed stock shortages among suppliers. Reduced cost pressures and efforts to stimulate client demand in turn contributed to a decline in factory gate charges for the first time in three months.

The monthly survey, conducted in association with Markit, a financial information services company and the Supply Chain Management Association (SCMA), offers an early indicator of trends in the Canadian manufacturing sector.

Adjusted for seasonal influences, the RBC Canadian Manufacturing PMI registered 52.2 in April, up slightly from 51.5 in March and above the neutral 50.0 threshold for the second month running. Although indicative of a moderate improvement in business conditions, the latest reading was the strongest since December 2014. This was mainly driven by a rebound in output, new business and employment growth, according to the survey. Meanwhile, the only negative influence on the headline PMI was a fractional reduction in stocks of purchases during April, which reflected ongoing caution among manufacturers in relation to their inventory management.

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“The recent trend in Canadian manufacturing is encouraging with an improvement in output, new orders and employment” said Craig Wright, senior vice-president and chief economist, RBC. “This pickup in activity has come alongside solid U.S. domestic demand and a more competitive currency which supports export activity.”

Key findings from the April survey included:

• Sustained rebound in output and new business volumes in April;
• Manufacturing employment rises for the second month running; and
• Input cost inflation eases to its lowest so far in 2016.

Regional highlights include:
• All monitored regions, except Alberta & B.C., signalled an upturn in manufacturing performance;
• Quebec recorded a marked rebound, with new work rising at the fastest pace since August 2012; and
• Ontario continued to outperform in April, but growth momentum has slowed since March.