Canadian Packaging

Markit Canada Manufacturing PMI September 2016

Subdued manufacturing conditions continue in September 2016 according to data compiled for Purchasing Managers' Index.


October 3, 2016
by Canadian Packaging staff

According to Markit Canada Manufacturing PMI, and based on data collected between September 12-26, 2016, Canadian manufacturers signaled another slowdown in growth momentum during September, with production volumes expanding at the weakest pace for seven months.
The latest survey from IHS Markit Ltd. also pointed to a renewed decline in overall new business volumes, partly driven by a sharper drop in export sales. Subdued demand conditions contributed a slight fall in employment numbers and a greater degree of inventory drawdown in September.
At 50.3 in September, down from 51.1 in August, the Markit Canada Manufacturing Purchasing Managers’ Index (PMI) pointed to only a marginal improvement in overall business conditions and the slowest pace of recovery since the upturn began in March. Lower new order volumes and reduced payroll numbers were the main negative influences on the headline index, alongside the sharpest drop in pre-production inventories since the start of 2016.
September data signaled only a marginal increase in manufacturing production, and the rate of expansion continued to soften from the 11-month peak recorded in May, 2016.
Survey respondents noted that lower levels of incoming new work and renewed efforts to streamline inventories had acted as brakes on output growth at their plants.
Manufacturers indicated a drop in new work for the first time since February, although the pace of decline was only fractional. Anecdotal evidence cited generally subdued client demand and lower spending on investment goods in particular.
Moreover, reduced levels of new business from abroad were recorded for the third month in a row, and the rate of contraction was one of the fastest seen since early-2015.
Signs of a slowdown in client spending resulted in more cautious inventory policies during September.
Reflecting this, stocks of finished goods were depleted for the sixth consecutive month and the decline in pre-production inventories was the sharpest recorded since the start of the year.
Manufacturers also pointed to lower staffing levels in September, which ended a six-month period of sustained jobs growth. Survey respondents mainly commented on the non-replacement of voluntary leavers. This contributed to a further rise in unfinished work, with the rate of backlog accumulation the steepest since October 2014.
Input buying decreased for the third successive month in September, but this did not prevent a further marked deterioration of vendor  performance.
Moreover, latest survey data indicated that supplier lead-times lengthened to the greatest degree since June, which manufacturers linked to low stocks and shipping delays.
Meanwhile, input cost inflation was the slowest recorded so far in 2016. Reduced cost pressures allowed for a return to falling factory gate prices and, although only marginal, the latest drop in output charges was the fastest since December 2015.

Regional highlights:

  • Manufacturing output growth was largely confined to Alberta & B.C. and Quebec;
  • Ontario recorded a decline in production volumes for the first time in just over three years;
  • All regions recorded a moderate fall in new export sales during September.

The Markit Canada Manufacturing PMI Report is based on data compiled from monthly replies to questionnaires 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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