Purchasing Managers' Index™
MARKET SENSITIVE INFORMATION
IHS Markit Canada Manufacturing PMI™
- Production volumes rise at slowest pace so far in 2017
- New order growth picks up slightly, despite fall in export sales
- Strongest input cost inflation since April 2014
Data collected November 13-24
IHS Markit Canada Manufacturing PMI (PDF, 268 KB)
Source: IHS Markit, StatCan.
Canadian manufacturers experienced another solid improvement in overall business conditions during November, but momentum remained softer than on average in the first half of this year. Reflecting this, manufacturing production growth eased to an 11-month low, while new order volumes expanded at one of the slowest rates seen in 2017 so far. A robust rate of job creation was maintained in November, reflecting continued efforts to boost operating capacity.
The seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index® (PMI™) registered 54.4 in November, little-changed from October’s nine-month low of 54.3. A stronger upturn in new order volumes and job creation helped to offset a weaker contribution from production growth. A marginal rebound in stocks of purchases also had a positive impact on the headline PMI in November.
Manufacturing output growth eased to its slowest since December 2016, which some firms attributed to subdued client demand in recent months. Higher levels of production have been recorded in each of the past 13 months, but the speed of recovery has slowed from the peak seen in March.
New order growth accelerated slightly from October’s 10-month low, but remained softer than at any time seen in the first half of 2017. Survey respondents noted that resilient domestic demand and a rebound in energy sector spending had supported the increase in new work. However, there were reports that reduced export sales had acted as a brake on overall new business growth in November. Although only marginal, the latest fall in new work from abroad was the fastest since September 2016, which was mainly attributed to weaker spending among U.S. clients.
Manufacturers experienced another increase in backlogs of work at their plants in November, driven by pressures on capacity and recent supply chain disruptions. Efforts to boost production schedules led to another robust rise in employment numbers, with the rate of job creation edging up to a three-month high.
Stocks of finished goods were reduced at the sharpest pace since the survey began in October 2010. Inventory depletion was mainly linked to constrained production capacity. Meanwhile, manufacturers indicated a slight rebound in pre-production inventories, despite a further sharp lengthening of delivery times for inputs.
Input cost inflation was the strongest since April 2014, which was linked to rising prices for a range of materials (particularly metals, plastics and packaging). Greater operating expenses led to the fastest rise in factory gate charges for over three-and-a-half years in November.
- Alberta & British Columbia recorded the fastest regional improvement in business conditions, supported by survey-record rate of job creation
- Ontario recorded a sustained acceleration in manufacturing growth, which bucked the national trend during November
- Quebec continued to experience a subdued upturn in manufacturing conditions
- Sharp rises in input costs were recorded in all regions monitored by the survey in November
Tim Moore, Associate Director at survey compilers IHS Markit:
“Softer export sales weighed on the manufacturing recovery in November, with output volumes expanding at the slowest rate so far this year. At the same time, operating margins were eroded as prices for raw materials increased at the steepest pace since April 2014.
“On a more positive note, latest data revealed a slight acceleration in both new business growth and job creation, which should boost production schedules during the months ahead. Moreover, inventory to sales ratios appear supportive to near-term growth, following the largest reduction in manufacturers’ stocks of finished goods for over seven years.
“Alberta & British Columbia continued to outpace other regions in November, underpinned by improved demand from the oil and gas sector. Capacity pressures remained evident among manufacturers in Alberta & British Columbia, which resulted in the fastest rise in staffing levels since the survey began in 2010.”
Christian Buhagiar, President and CEO, SCMA
“Canada’s manufacturing sector is approaching the end of 2017 in much stronger shape than it began the year, reflecting sustained increases in production volumes, new orders and employment numbers. Output has now increased for 13 months running, which is the longest expansion phase recorded by the survey since the beginning of 2015.
“However, the latest data indicates that the recovery has now moved onto a slower growth path, with weaker export sales acting as a brake on manufacturing performance in recent months. Domestic demand could only take some of the slack in November, meaning that total new order growth was among the slowest so far this year.
“Supply chain disruptions have also held back the manufacturing sector, with backlogs of work growing further in November while stocks of finished goods were depleted at the steepest pace since the survey began in late-2010.”
“Reduced raw material availability resulted in a sharp and accelerated pace of cost inflation across the manufacturing sector. The latest increase in operating expenses was the fastest for around three-and-a-half years. Canadian manufacturers widely commented on higher prices paid for metals, plastics and packaging during November.”
For further information, please contact:
Tim Moore, Associate Director
Joanna Vickers, Corporate Communications
Supply Chain Management Association
Lynne Coles, Vice President, Growth and Chief Marketing Officer
Note to Editors:
The IHS Markit Canada Manufacturing PMI™ Report is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies. The panel is stratified by company workforce size and by Standard Industrial Classification (SIC) group, based on industry contribution to Canada GDP.
Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. The IHS Markit Canada Manufacturing Purchasing Managers’ Index® (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times Index inverted so that it moves in a comparable direction.
The Purchasing Managers’ Index (PMI) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.
About Supply Chain Management Association
The Supply Chain Management Association (SCMA)™ is Canada’s largest association for supply chain management professionals. We represent 7,500 members as well as the wider profession working in roles that cover sourcing, procurement, logistics, inventory, and contract management. SCMA™ sets the standards for excellence and ethics, and is the principal source of professional development and accreditation in supply chain management in Canada. www.scma.com.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
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