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Canadian manufacturing index hits eight-month high

August 04, 2014

Canadian manufacturing business conditions expanded in July at the fastest pace since November 2013, according to the Royal Bank of Canada’s Canadian manufacturing purchasing managers’ index. July’s reading of 54.3 is up from June’s reading of 53.5 and was mainly driven by faster rises in output, new orders and employment at the start of the third quarter. The RBC PMI is a monthly survey conducted in association with Markit, a financial information services company, and the Supply Chain Management Association.

July data signaled a solid increase in staffing levels across the Canadian manufacturing sector. The seasonally adjusted Employment Index has now posted above the neutral 50.0 value for six months running and the latest reading signaled the fastest rise in payroll numbers since September 2013. Increased workforce numbers were linked to rising demand and greater optimism about the economic outlook.

“Canadian manufacturers have made a bright start to the third quarter of 2014, as highlighted by stronger production growth and another improvement in sales volumes during July,” said Cheryl Paradowski, president and CEO of the Supply Chain Management Association. “Therefore, the latest survey suggests a decisive shift towards faster growth across the manufacturing sector this summer, with output, new business and employment all rising at the fastest rates seen so far this year. Moreover, business conditions are improving against a backdrop of softening cost pressures, which in turn contributed to the slowest increase in manufacturers’ output charges since the end of 2013.”

The RBC PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 industrial companies.