Canada’s manufacturing sector showed expansion at a 15-month high in the September RBC Manufacturing PMI. The composite indicator rose from 52.1 in August to 54.2 in September.
Both output and new orders grew faster in September. New export orders saw the biggest increase since June 2012. The increase in manufacturing activity led to increased hiring, also at a 15-month high.
Craig Wright, an RBC senior vice president and chief economist, expressed cautious optimism on the news:
"While challenges in the sector remain, this rebound is encouraging. An anticipated strengthening in global economic growth, particularly in the U.S. which is Canada's largest trading partner, bodes well for manufacturing activity late this year and early next."
In August, exports rose 1.8% to $39.8 billion, according to data from Statistics Canada. That was 6.1% higher than in August 2012. Approximately three-fourths of those exports were to the United States. Leading the export increases were crude oil, crude bitumen, refined petroleum products and metal and non-metallic mineral products.
“Rising energy exports, up 18.2% in year-ago terms, accounted for almost two thirds of all the year-ago increase in Canadian exports in August,” observed Bill Adams, senior international economist for PNC Financial Service Group. “Oil by rail logistics appear to have bypassed the bottlenecks that inhibited investment and production in the Canadian oil sands in 2012.”
Adams isn’t ready to jump on the bandwagon yet for sharply faster growth in Canada’s manufacturing sector. While acknowledging that the PMI pointed to possible accelerated growth in the last quarter of 2013, he said other factors such as payroll job growth, average weekly earnings and monthly real GDP all indicated modest growth.
“…with so many other indicators pointing to only moderate growth in recent months, more data is needed before an argument for Canadian acceleration at year-end becomes convincing.”
