North American Manufacturing PMIs Fall Short but Still Positive

by on January 2, 2014 5:03 pm BST

The Royal Bank of Canada (RBC) manufacturing PMI, in conjunction with Markit Economics, fell short today after indicating that the index fell from 55.3 to 53.5 in December. Canada is still above that key 50 reading, but it continues to show that there is still a lot of work to be done in order to stabilize growth in Canada.

The RBC manufacturing PMI data showed that there was positive growth in new businesses, yet new orders dropped to a four-month low. Employment did increase, and input prices rose to nine-month highs. Paul Ferley, assistant chief economist at RBC, said “Our outlook for 2014 is underpinned by the assumption that Canadian exports will firm as the U.S. continues on a path of recovery – this will provide a healthier environment for manufacturing to further grow in the New Year.”

The Institute for Supply Management (ISM) manufacturing PMI showed that the United States manufacturing eased slightly but still remain elevated, falling from 57.3 to 57. Orders increased to the highest level in almost three-year high.Factory employment increased to a two-high high.”The year ended in a pretty bright spot for manufacturing and domestic demand,” said Peter Newland, a US economist at Barclays PLC.

The December PMI data, globally, was mixed. China, France, the United Kingdom all missed PMI expectations, but readings were still indicating some levels of growth. Italian and Spanish PMI data were in the green. Italian PMI increased from 51.8 to 53.3, and Spanish PMI data increased from 49.9 to 50.8.

The United States also released the unemployment claims data earlier this morning. Jobless claims fell by 2K to 339K, according to the Labor Department.  There are likely a combination of factors lowering claims. Seasonality is likely to still be in effect. “The data likely won’t be free of seasonal distortions until the middle of this month,” said  Pantheon Macroeconomic economist Ian Shepherdson.