Canadian manufacturing stabilizing: RBC PMI

The RBC Canadian Manufacturing PMI moved closer to stabilization in January, following a record low at the end of 2015. At 49.3 in January, the seasonally adjusted index recovered from December’s survey-record low of 47.5.

Still, the index remained below its neutral 50 threshold for the sixth consecutive month, and the recent period of decline is the longest since the survey began in late 2010.

Measured overall, business conditions are weak. But the main bright spot is a solid growth in export sales, which helped offset some of the downturn in domestic demand—a number of manufacturers say that the weaker loonie had contributed to rising new business wins from U.S. clients.

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“Ontario manufacturing continues to be the bright spot, while the sharp drop in performance in Alberta and B.C. suggests that heightened economic uncertainty and ongoing declines in capital spending are weighing on the economy,” says Craig Wright, senior vice-president and chief economist, RBC.

Regional highlights include the fact that new export sales increased in three of the four monitored regions, with Alberta and B.C. being the exception. Also, strong rises in average cost burdens were registered across all areas monitored by the survey in January.

Read: Why trade between Canada, U.S. is a hassle

On the upside, job shedding moderated across the manufacturing sector at the start of 2016, following the record fall seen during December. The rate of decline in staffing numbers was the slowest for six months during January, but a number of firms also note the uncertain business outlook had led to the non-replacement of voluntary leavers.

“Manufacturers saw a solid upturn in new work from abroad, which helped support production levels but didn’t quite offset sustained weak domestic sales,” says Cheryl Paradowski, president and chief executive officer, SCMA. But, “the figure for Canada as a whole continued to mask diverging fortunes provincially, notably between the export-led manufacturing rebound in Ontario and the oil-related downturn faced by a large proportion of manufacturers in Alberta and British Columbia.”

Read: Further dip in oil could benefit investors

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.