rise-to-challenge

The manufacturing sector is struggling, says the latest RBC Purchasing Managers’ Index.

The sector’s output and new business growth levels were both low. Meanwhile, staffing levels were reduced for the first time in two years.

Further, manufacturers responded to the moderation in new order growth by cutting their input buying and pre-production inventory levels.

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Overall, the headline RBC PMI dipped from 53.5 in December to 51.7 in January. Although the index remained above the neutral 50.0 value, the latest reading pointed to the slowest overall improvement in business conditions since April 2013.

“Canada’s manufacturing sector continued to grow in January, albeit at slower pace than December, registering at 51.7, down from 53.5,” says Craig Wright, senior vice president and chief economist for RBC.

He adds, “Underlying economic conditions, such as stronger growth in the U.S. economy and a weaker Canadian dollar, remain supportive for the outlook for domestic manufacturing in the period ahead.”

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The survey also found average cost burdens increased in the Canadian manufacturing sector in January, which extended the current period of continuous input price inflation.

Regional highlights include:

  • Quebec registered the slowest rise in new order volumes.
  • Jobs growth was largely confined to Alberta and British Columbia.
  • Robust rises in cost burdens were posted in all four regions in January.

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“Canadian manufacturing growth stepped down a gear at the start of 2014, as highlighted by the slowest rises in production and new orders for five months,” says Cheryl Paradowski, president and CEO of SCMA.

She adds, “[The good news is] the latest figures suggest resilient export sales across the manufacturing sector as new business from abroad picked up at the sharpest rate since last September.”

Originally published on Advisor.ca

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