According to the RBC Canadian Manufacturing Purchasing Managers Index for June 2012, there was further improvement in Canadian manufacturing business conditions.

The headline RBC PMI registered at 54.8, up slightly from 54.7 in May 2012 and the strongest improvement since September 2011. The average PMI reading for the second quarter was also up, from 51.6 in Q1 2012 to 54.3 this quarter.

Mr Craig Wright SVP and Chief Economist at RBC said that "Conditions across the sector are favorable, and we expect that continued gains in employment and an uptick in exports will help contribute to further economic expansion in 2012."

June's report showed the strongest and fastest rise in new orders since September 2011 due to increased demand while export demand continued to increase for the 4th month, particularly from the US. To keep up with strong demand, output increased the most since last December while backlogs of work dropped. Stocks of finished goods were depleted at the sharpest rate recorded thus far by the series.

The quantity of inputs along with input inventories rose in June 2012 while suppliers' delivery times lengthened further. Input costs rose further in June even while input prices inflation slowed down, reporting the lowest rate since October 2010. Firms reported raising their selling prices to recoup the higher input costs. Manufacturing employment increased again for the 5th month with one in every four respondents hiring since May 2012.

Source - Royal Bank of Canada

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