RBC Canadian Manufacturing Purchasing Managers’ Index Rises For Second Month

RBC Canadian Manufacturing Purchasing Managers’ Index (PMI) looks at Canadian business conditions across the broad Canadian manufacturing sector. These conditions include growth of output, new orders and employment in all provinces and regions of Canada. The RBC Canadian Manufacturing Purchasing Managers’ Index also referred to as PMI rose to 52.2 in April marking a slight increase from 51.5 in March. Anything above 50 is considered expansion.

RBC Canadian Manufacturing Purchasing Managers’ Index PMI Accelerating

The Canadian Manufacturing PMI shows that since December 2014, growth is begin to accelerate. The biggest concern reflected in the April PMI figures is the cautionary stance of purchasers as actual inventory of goods on hand was reduced. This shows purchase managers remain wary of adding much new inventory to their already existing inventory numbers.

Canadian Economy Muddling On

The April 2016 RBC Canadian Manufacturing Purchasing Managers’ Index also shows weak prospects for inflation despite a rising demand for raw materials which is some instances did show slight stock shortages for some materials among supliers. Cost pressures continue to decline and price reductions were evident as suppliers continue to try to entice their clients to order more product.

The entire report for April is encouraging as it builds on the prior months’ reports but it continues to suggest that while the Canadian manufacturing economy is showing signs of improvement it is far from robust.

Stay Invested

The April RBC Canadian Manufacturing Purchasing Managers’ Index does suggest though that investors remain selectively invested in stocks within the TSX Composite Index. April’s PMI report was the best in more than a year and as it builds on March’s report showing increased buying activity among purchasers.

Canadian Bank Stocks

That should also mean increases in the valuations of Canadian Bank Stocks and this morning Bank of Montreal Stock was upgraded to outperform with a target of $85 by Canaccord Genuity.  This also means any dips or pullbacks in Canadian Bank Stocks are probably good opportunities to setup some trades.

Mining Stocks

Mining stocks are rising this morning. iSuares TSX Global Base Metals Index which trades under the symbol XBM is up 20.5% this year.  It has recovered a lot of lost value since bottoming at $5.58 on January 21 2016. It is now trading at $9.28 this morning. The 52 week high is $13.52 set in early May 2015.

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