Manufacturing sector faced difficult conditions in September: survey

manufacturing-RBC-PMI-Statistics-Canada-EDIWeekly

The RBC PMI monthly survey of Canada’s manufacturers shows that business conditions deteriorated in September to their lowest level in five years. Output, new business and employment levels all fell, according to the RBC PMI for September. As well, weaker demand resulted in reduced spending on input materials, as companies attempted to streamline inventories. Backlogs of work fell at the fastest pace since April.

Export sales also stagnated in September, despite the favourable exchange rate against the US dollar. The weakened Canadian dollar is repeatedly cited as a sign of hope for a resurgence in the country’s exports, but that has not happened so far. RBC vice-president and chief economist Craig Wright said that the deterioration in September was due to “underlying economic conditions” including the falling price of oil, and that the weakness was mainly in Alberta and British Columbia. In the rest of the country, PMI levels were above neutral and “remained in expansion territory.”

Ontario saw “solid growth patterns” and job creation in the manufacturing sector, though the president of the Supply Chain Management Association, Cheryl Paradowski, said that September was “a very tough month” for manufacturing in Canada. The growth in production and job creation in Ontario is in contrast with the trends seen in other parts of the country, she said.

Overall conditions in the Canadian manufacturing sector continued to deteriorate in September due to underlying economic conditions, including renewed downward pressure on the price of oil. Weakness was primarily concentrated in Alberta and British Columbia, with the rest of Canada’s PMI levels registering above neutral and remaining in expansion territory. Despite persisting challenges in the oil and gas sector, we expect the strengthening U.S. economy to boost Canadian exports and business conditions over the balance of the year.

Wright also repeated the often-stated expectation that the strengthening US economy will lead to a boost in Canadian exports and business conditions for the rest of the year.

The RBC PMI is based on data compiled from questionnaires sent to purchasing executives in more that 400 industrial companies. The RBC PMI is a composite index that reflects new orders, output, employment, suppliers’ delivery times and stock of items purchased. The index fell from 49.4 in August to 48.6 in September. It was the second month running that index was below the neutral threshold of 50.

2manufacturing-RBC-PMI-Statistics-Canada-EDIWeekly
GDP in Canada grew 0.3 per cent in July. Source: Statistics Canada

There was better news from Statistics Canada, however. GDP numbers for July show an increase of 0.3 per cent, following a rise of 0.4 per cent in June. The increase was led by the energy sector, mining, manufacturing and finance. There had been five consecutive monthly declines from January to May.

Did you miss this?

Other Popular Stories

  • GRX-810 is an oxide dispersion strengthened (ODS) alloy: NASA's new alloy 1000X stronger than previous alloys
  • Cars and aerospace boosted Canada's manufacturing sales in November
  • Bombardier to build MRO facility in China
  • The world's largest carbon capture plant opens in Iceland — will pull 4,000 metric tons per year
  • English-French partners show all-electric aircraft at Paris Air Show
  • Auto Industry Expected to Meet 2025 Standards
  • SpaceX lost 40 satellites to solar storm, estimated cost of $10 to $20 million
  • Bruce Power nuclear deal good for Ontario manufacturers: CME
  • Building code change could help drain water heat recovery manufacturers
  • SpaceX’s Falcon 9 Ripped Hole in Ionosphere During 2017 Launch
  • 91% of coal-fired power plants are leaking toxic chemicals into groundwater: report
  • California mandates energy storage to bring more renewables into grid
  • Manufacturing sales up in November, government scraps duties on imported food ingredients
  • Pilot project will use algae to recycle industrial CO2 emissions
  • Ontario Local Food Bill hailed by farm/food groups
  • Manufacturers and employers win with new Labour rules in Ontario; jobs did increase 17,600 in January 2019
  • Cars and oil pulled Canada's manufacturing down in September
  • Petronas defers final investment decision on BC LNG project
  • Bill Gates betting we can invent our way to a clean energy world
  • Robot from Oil & Gas Technology Centre may improve safety, enhance productivity and reduce costs for offshore oil and gas projects
Scroll to Top