Manufacturing sector sees gains in July: RBC

Nearly 1 in 5 firms hired new staff
||Last Updated: 08/02/2011

The overall business conditions in the Canadian manufacturing sector improved in July, according to the RBC Canadian Manufacturing Purchasing Managers Index (PMI).

At 53.1, up from 52.8 in June, the PMI signalled a solid improvement in the sector's operating conditions and has now posted above the 50.0 no-change threshold that separates growth from contraction for 10 consecutive months, found the survey of 400 manufacturing executives across the country.

The number of people employed in the manufacturing sector has increased, as 18
per cent of survey respondents said they hired additional staff in July.

This employment growth was generally linked to larger new order volumes, found the survey. Notably, the rise in new work intakes was solid and faster than that recorded in June. A number of firms commented on new client wins in both the Canadian and international markets in July, found the survey.

Manufacturing companies based in Alberta and British Columbia reported the strongest monthly rise in staffing levels during the latest survey period.

"The uptick in the New Orders Index that indicated a solid rate of expansion, coupled with improved business conditions across the country, bode well for Canada's manufacturing sector overall," said Paul Ferley, assistant chief economist at RBC. "However, modest gains in production and the soaring loonie may offset some of the momentum in the sector as we move into the second half of the year."

In light of greater new order requirements, Canadian manufacturers increased production during the latest survey period. That said, output levels rose only modestly and at a broadly similar rate to that registered in June.

The amount of outstanding work recorded by firms operating in the Canadian manufacturing sector decreased during July. However, backlogs of work were depleted only slightly, found the survey.

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