Canada manufacturing improves in May but Q1 GDP growth disappoints

01 June 2012 17:06  [Source: ICIS news]

TORONTO (ICIS)--Conditions in Canada’s manufacturing sector improved further in May as output and new orders increased, but the country's first-quarter GDP growth fell short of expectations, according to data released on Friday.

Toronto-based Royal Bank of Canada (RBC) said its monthly purchasing managers’ index (PMI) for Canada rose to 54.7 points in May from 53.3 in April - recording its strongest monthly improvement since September 2011. Readings of more than 50.0 indicate an expansion in manufacturing.

"The Canadian manufacturing sector has proven to be quite resilient over the past several months against a backdrop of market uncertainty and softening conditions in many other parts of the world,” said RBC chief economist Craig Wright.

"Manufacturing plays an important role in the country's economic growth and we expect Canada's GDP to grow by 2.6% in 2012,” Wright added.

However, in a related report on Friday, statistics agency Statistics Canada said Canada's GDP grew by an annualised 1.9% in the three months ended 31 March - well below RBC's projection and also below the 2.4% rate the country's central bank has forecast for 2012.

RBC's PMI is based on survey responses from more than 400 Canada-based industrial companies. RBC conducts the survey in cooperation with research firm Markit and the Purchasing Management Association of Canada.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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