Canadian Packaging

Manufacturing PMI signals fastest growth since December 2014

Featuring data collected during January 12-25, 2017, Market PMI finds Headline PMI rises from 51.8 to 53.5 in January, fastest rates of output and new order growth for over two years, and input price inflation accelerates to strongest since June 2014.


February 6, 2017
by Canadian Packaging staff

Canadian manufacturers reported a strong start to 2017, with business conditions improving at the fastest pace for just over two years. The upturn reflected robust rates of output and new order growth in January, alongside a sustained rise in staffing levels. Looking ahead, around 41% of the survey panel anticipate an increase in production volumes over the next 12 months, while only 6% forecast a reduction. As a result, this signaled one of the most upbeat expectations for output growth since early-2014.

The seasonally adjusted Markit Canada Manufacturing Purchasing Managers’ Index (PMI) registered 53.5 in January, up from 51.8 in December and above the neutral 50.0 threshold for the eleventh consecutive month. Moreover, the headline PMI pointed to the strongest upturn in operating conditions for just over two years.

A robust and accelerated expansion of overall production volumes was the key factor boosting the manufacturing sector in January. Higher levels of output have been recorded in each of the past three months, with the latest rise the strongest since December 2014. Survey respondents commented on efforts to boost production in response to greater client demand. Some firms also noted that output growth had been helped by a reduced desire to streamline  inventories.

January data signaled the sharpest upturn in new order volumes for just over two years, which largely reflected stronger demand from domestic sources.

A number of manufacturers cited rising sales to energy sector clients in particular. Meanwhile, new export orders picked up at only a moderate pace, although the rate of expansion was the most marked seen since March 2016.

Higher levels of incoming new work contributed to another increase in staffing numbers across the manufacturing sector in January. The latest survey indicated that the rate of job creation was the fastest since last July, which was linked to greater production requirements and improved confidence towards the business outlook. Despite efforts to boost payroll numbers, manufacturers reported a rise in backlogs of work for the first time in three months during January.

Meanwhile, input buying increased at a solid pace at the start of 2017, while inventories declined for a further month. Supplier delivery times lengthened to the greatest degree since November 2014, although this was partly attributed to transportation delays following extreme weather.

On the price front, the latest survey revealed a sharp and accelerated pace of cost inflation.

This was linked to higher commodity prices and rising imported raw material costs. Pressures on margins resulted in one of the fastest rates of factory gate price inflation since early-2014.

Regional highlights:

  • Manufacturing growth was the strongest for over three years in Alberta & B.C.;
  • Business conditions deteriorated again in Quebec, partly reflecting weaker export sales;
  • All regions reported a marked deterioration in supplier performance at the start of 2017.

The Markit Canada Manufacturing PMI Report is based on data compiled from monthly replies to question naires sent to purchasing executives in over 400 industrial companies. The panel is stratified by company workforce size and by Standard Industrial Classification (SIC) group, based on industry contribution to Canada GDP.

About Supply Chain Management Association
The Supply Chain Management Association (SCMA) is Canada’s largest association for supply chain management professionals. It represents 7,500 members as well as the wider profession working in roles that cover sourcing, procurement, logistics, inventory, and contract management. SCMA sets the standards for excellence and ethics, and is a  principal source of professional development and accreditation in supply chain management in Canada. Visit www.scma.com for more information.

About IHS Markit
IHS Markit is a world leader in critical information, analytics and expertise to forge solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth. IHS Markit is a registered trademark of IHS Markit Ltd. More information at www.ihsmarkit.com.

About PMI
Purchasing Managers’ Index (PMI) surveys are now available for over 30 countries and also for key regions including the eurozone. They are one of the most closely-watched business surveys in the world, favored by central banks, financial markets and business decision-makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics.



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