The RBC Canadian Manufacturing PMI moved closer to stabilization in January, following a survey-record low at the end of 2015. Measured overall, business conditions deteriorated to the lowest degree for five months, reflecting softer falls in output, new business and employment.
The main bright spot was a solid rebound in export sales, which helped offset some of the downturn in domestic demand. A number of manufacturers noted that the weaker loonie had contributed to rising new business wins from U.S. clients. At the same time, exchange rate depreciation also led to a strong and accelerated increase in average cost burdens, with input price inflation hitting an 18-month high in January.
A monthly survey, conducted in association with Markit, a leading global financial information services company, and the Supply Chain Management Association (SCMA), the RBC PMI offers a comprehensive and early indicator of trends in the Canadian manufacturing sector.
At 49.3 in January, the seasonally adjusted RBC Canadian Manufacturing PMI recovered from December’s survey-record low of 47.5, but remained below the neutral 50.0 threshold for the sixth consecutive month. The current period of decline is the longest since the survey began in late-2010, although the latest reading was the highest since last August.
“While Canadian business conditions continued to deteriorate in January, we saw signs of stabilization in the manufacturing industry supported by strong export sales alongside a pick up in the US economy and a weakening Canadian dollar,” said Craig Wright, senior vice-president and chief economist, RBC. “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.”
