Canadian Manufacturing

Exports boost bleak manufacturing outlook

Export sales were the lone bright spot, offsetting some of the downturn in domestic demand



TORONTO—A monthly survey of purchasing managers suggests the outlook for Canada’s manufacturing sector remains negative but is not quite as dire as in December because of a pickup in export demand.

The RBC Canadian Manufacturing PMI registered 49.3 in January, just below the 50-point mark that indicates a neutral outlook.

Royal Bank noted in its commentary that the December reading of 47.5 was a record low for the five-year-old index. Any measure below 50 is considered a negative outlook for the coming months.

January also marked the sixth negative month in a row, the longest stretch since the RBC index began in late 2010.

Similar indexes published in the United States and China also showed negative readings.

The Canadian manufacturing index showed the overall business conditions deteriorated, reflecting lower output, new business and employment in January.

The one area of improvement was a rebound in export sales, which offset some of the downturn in domestic demand.

“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,” RBC chief economist Craig Wright said in a statement.

RBC publishes the index in conjunction with Canada’s Supply Chain Management Association and Markit, a global financial information company that compiles similar indexes for several countries and regions.

“After December’s record low, Canada’s manufacturing sector was close to stabilizing in January, with improving exports a key ingredient at the start of 2016,” said Cheryl Paradowski, SCMA’s president and chief executive officer.

“Manufacturers saw a solid upturn in new work from abroad, which helped support production levels but didn’t quite offset sustained weak domestic sales.”

“The figure for Canada as a whole continued to mask diverging fortunes provincially, notably between the export-led manufacturing rebound in Ontario and the oil-related downturn faced by a large proportion of manufacturers in Alberta and British Columbia,” Paradowski said in the statement.

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