S&P Global Canada Manufacturing Purchasing Managers Index (PMI)

Markit Canada Manufacturing Purchasing Managers Index (PMI) shows changes in business conditions in Canada's industrial sector in the specified month. The indicator is based on monthly surveys of purchasing managers working in more than 400 private companies of the manufacturing sector.

Often purchasing managers can track changes in market conditions prior to other company employees, because purchases precede company's production activities. Purchasing managers are among the first to notice such changes in business conditions. The sample for the survey is chosen so as to cover the maximum possible number of large companies across the country.

Respondents are interviewed regarding five main parameters: production, new orders, supplier deliveries, inventory levels and employment environment. The survey participants provide relative estimates: whether figures have increased, decreased or remain unchanged. PMI is a composite index, having five individual indexes with the following weights: new orders - 0.3, output - 0.25, employment - 0.2, suppliers’ delivery times - 0.15, stock of items purchased - 0.1.

The index is seasonally adjusted. Individual weights are given to polled companies. Readings above 50 indicate that most of respondents positively characterize current business conditions. Readings below 50 mean worsening of business conditions.

PMI is one of the most popular indexes closely watched by analysts. It provides operational information covering the entire manufacturing sector. It is interpreted as a leading indicator of production and inflation. Manufacturing PMI growth is an indication of favorable market conditions and can be seen as positive for the Canadian dollar.