PMI shows manufacturing growth, high cost inflation
- April 2, 2018
The IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI), released on April 2, registered 55.7, little changed from the 55.6 posted in February and above the neutral 55.0 threshold for the 25th month in a row.
Relatively strong rates of output and new order growth resulted in another marked rise in employment numbers, alongside the fastest upturn in purchasing activity for almost seven years.
The data, collected over the March 12-23 time frame, shows strong rises in output and new orders in March, a sharp increase in average cost burdens, and input buying expanding at the fastest pace since April 2011.
March data pointed to sustained pressure on operating capacity across the manufacturing sector, as highlighted by another solid rise in backlogs of work. Survey respondents noted that strong client demand had led to efforts to boost production capacity at their plants.
Input cost inflation picked up to its fastest since April 2014 in March, which firms mainly linked to higher prices for steel and chemicals. Increased operating expenses in turn led to another robust rise in factory gate charges, although the rate of inflation eased to a three-month low in March.
“Intense supply chain pressures and sharply rising raw material costs have been key headwinds for Canadian manufacturing companies so far this year,” said Tim Moore, associate director at IHS Markit. “The latest survey indicated that input price inflation was the highest for around four years, reflecting strong cost pressures for end users of steel and chemicals in particular.”