Expansion continues as the sector recovers from rough 2012

The RBC Canadian Manufacturing Purchasing Mangers’ Index (RBC PMI) is designed to give a snapshot of the state of the manufacturing sector. An RBC PMI reading of above 50.0 signals expansion while a reading below 50.0 means the sector is contracting. In the month of June, the RBC PMI registered a 52.4 signalling that the sector expanded for the second straight month. The mark of 52.4 was a slight dip from the 53.2 recorded in May, but was still the second highest level since September of 2012.

June's PMI rating for the manufacturing sectorThe RBC PMI showed that new orders continued to grow in June. Although these gains were less than in May, they were much higher than those recorded at the beginning of the year. New export work also rose with most of this business stemming from Europe. These increases in new work lead to further increases in employment as companies hired faster than the series average. This is encouraging news for anyone looking for work in the manufacturing sector as all indications show that these trends will continue. In addition, output also increased during the month causing companies to deplete their stocks of finished goods. On the downside, the costs of inputs climbed during the month while output costs remained flat. This put added pressure on manufacturers’ margins as the gap between input and output costs shrunk.

June was once again a strong month for the manufacturing industry in Canada following several months of contraction earlier in the year. Craig Wight, the senior vice-president and chief economist at RBC sees these trends as an indication that the slowdown suffered earlier in the year was a temporary blip. He expects a stronger international demand to help improve conditions in the second half of 2013. These positive trends are expected to continue through the coming months and the industry looks in good shape to recover from its lackluster performance in the second half of 2012.


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