More signs were shown this morning that the Canadian manufacturing sector is not as strong as before, in a new report by Canada's biggest bank.
The RBC Canadian Manufacturing Purchasing Managers' Index for October indicated that the pace of growth in the sector slowed for the fourth consecutive month dropping to 51.4 from 52.4 in September and a recent high in June of 54.8. In fact, the pace of growth is the weakest in nine months relative to a reading in January of 50.6. Any reading above 50 indicates expanding activity with the greater the gap the faster the pace of expansion. Encouragingly, the October measure indicates that growth continues in the month in contrast to indications of declining manufacturing output in a number of other countries.
The overall PMI index is compiled as a weighted sum of five individual components. In October all five measures contributed to the slowing in growth. This was led by the new orders measure which dropped to 50.9 from 53.0 in September. This slowing occurred despite the export orders measure, which is not included in the compilation of the overall PMI, rising to 52.5 in October from 50.8 in September indicating an unexpected recovery in foreign demand. Of the other four components included in the PMI, the next largest drop was the employment measure which fell to 52.1 from 53.0.
The index is also calculated on a regional basis for Ontario, Quebec, Alberta/British Columbia and the "Rest of Canada." The October data continues to show manufacturing is growing in all regions though the pace of growth has slowed in three of those regions. The biggest drop was in Quebec where the measure in October dropped to 51.1 from 54.4 in September. Lower rates of growth were also recorded in the "Rest of Canada" and Alberta/British Columbia, where the measures dropped to 51.8 from 53.2 and to 51.2 from 52.0, respectively. Ontario was the only region where activity picked up with the measure rising to 51.8 from 50.3.
