Purchasing Managers' Index™
MARKET SENSITIVE INFORMATION

IHS Markit Canada Manufacturing PMI™

 

KEY FINDINGS:

  • March data reveal weaker output and jobs growth
  • New export orders fall at fastest rate since February 2015
  • Input price inflation continues to moderate in March

PMI April 2019

Canadian manufacturers signalled another slowdown during March, with overall business conditions improving at the weakest rate for two-and-a-half years. The latest survey revealed softer rises in manufacturing output and employment levels in response to subdued demand conditions. Export sales were a particular drag on the sector in March, with new work from abroad falling to the greatest extent since February 2015.

At 50.5 in March, the headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index® (PMI®) was down from 52.6 in February and only slightly above the neutral 50.0 mark. The latest reading signalled the slowest upturn in operating conditions across the manufacturing sector since September 2016.

Weaker production growth was a key factor behind the fall in the headline PMI during March. Output volumes increased at the slowest pace for almost two-and-a-half years. Survey respondents cited fragile customer demand, especially from export markets. Some manufacturers also noted efforts to streamline their inventories of finished goods by cutting back on production schedules.

March data pointed to a fractional decline in new orders received by manufacturing firms, which ended a 29-month period of sustained expansion. The overall reduction was driven by the sharpest fall in new export work for just over four years. A number of respondents cited weaker global trade flows and pressure on export competitiveness from rising domestic raw material costs (particularly steel).

Subdued client demand resulted in a lack of work to replace completed projects during March. This was highlighted by a reduction in backlogs of work across the manufacturing sector for the first time in six months. Some goods producers responded to softer business conditions by paring back staff hiring at their plants. The rate of employment growth was only marginal and the weakest for almost two-and-a-half years.

A slowdown in new work also weighed on manufacturers' assessment of the year-ahead business outlook. The degree of positive sentiment towards future production growth was the second-weakest since August 2016.

The latest survey indicated greater efforts to reduce stocks in line with softer demand conditions. Post-production inventories declined to the largest extent since November 2017. At the same time, stocks of purchases fell at the fastest pace for just over three years.

Input buying decreased for the first time in 16 months, which mirrored the downward trend reported for stocks of purchases and in March. Softer demand for raw materials helped to alleviate pressure on supply chains, with vendor lead times lengthening to the least marked extent since November 2016. Moreover, input cost inflation eased again in March and reached its lowest for two-and-a-half years.

Regional data signalled a broad-based loss of momentum during March, with Alberta & British Columbia posting the weakest overall manufacturing performance. Moreover, all four monitored regions reported a drop in new export sales.

PMI April 2019

COMMENT:

Christian Buhagiar, President and CEO at SCMA, said:

“The latest survey provides a clear signal that the recent global manufacturing slowdown has impacted on Canadian goods producers, with export sales falling to the greatest extent for just over four years in March.

“Subdued demand conditions placed a brake on both production growth and staff hiring across the manufacturing sector, which led to the slowest overall improvement in business conditions since September 2016.

“March data also pointed to a reduction in input buying and intensified efforts to streamline inventories in response to concerns about the near-term business outlook.

“A gradual slowdown in input cost inflation from the peaks seen last summer is a welcome development. However, manufacturers' operating margins remain under pressure amid weaker order flows and intense competition in key export markets."

 

For further information, please contact:

IHS Markit
Joanna Vickers, Corporate Communications
Telephone +44-207-260-2234
E-mail This email address is being protected from spambots. You need JavaScript enabled to view it.

Supply Chain Management Association™
Lynne Coles, Vice President, Growth and Chief Marketing Officer
Telephone 416-542-3860
Email This email address is being protected from spambots. You need JavaScript enabled to view it.

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.

IHS Markit does not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from IHS Markit. Please contact This email address is being protected from spambots. You need JavaScript enabled to view it..

About Supply Chain Management Association™

The Supply Chain Management Association (SCMA)™ is Canada’s largest association for supply chain management professionals. We represent 7,000 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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About PMI

Purchasing Managers’ Index® (PMI™) surveys are now available for over 40 countries and also for key regions including the eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.ihsmarkit.com/product/pmi.

The intellectual property rights to the IHS Markit Canada Manufacturing PMI™ provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index® and PMI™ are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trademark of IHS Markit Ltd.