Why Canada’s Manufacturing PMI Improved Strongly in March



Canada’s manufacturing PMI

According to the report by Markit Economics, Canada’s manufacturing PMI (purchasing managers’ index) stood at 55.5 in March 2017 compared to 54.7 in February, which meets the market estimate. March’s manufacturing PMI is the strongest reading since October 2013.

The stronger growth in March indicated robust improvement in business activity in the country. The improved performance of Canada’s manufacturing PMI is mainly due to the following:

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  • New orders rose at a faster pace in March 2017. Production volume also continued its expansion in the same month.
  • Export orders increased at a higher rate during the month. Domestic demand also showed stronger growth during the same month. This demand mostly came from the energy sector.
  • Manufacturers indicated some improvement in employment growth in March. Labor productivity also improved in that month.

Impact on the economy

In this current global (ACWI) (VTI) (VEU) environment, the market is facing more uncertainties ahead of the change in trade policy of the United States (QQQ) (SPY) (IWM) and political uncertainty in the Eurozone. 

Any change in the United States’s trade policy could impact Canada’s business environment. However, the overseas demand showed an improvement, which improved the manufacturing PMI of most of the economies.

In March 2017, the improvement in domestic demand and export orders are important factors that drove Canada’s manufacturing PMI. The improvement in domestic demand indicates that investors’ confidence in the economy is improving.

In the next part of this series, we’ll look at the performance of Japan’s (EWJ) manufacturing PMI for March 2017.


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