May 1, 2015 / 1:33 PM / in 2 years

Canada manufacturing activity shrinks for third month in April

Workers piece together outerwear on the manufacturing floor of Canada Goose's facility in Toronto January 17, 2012. REUTERS/Fred Thornhill

OTTAWA, May 1 (Reuters) - Activity in the Canada’s manufacturing sector shrank in April for the third month in a row as the new orders measure fell to its lowest level on record amid weaker demand in the energy sector, data showed on Friday.

The RBC Canadian Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, was nearly unchanged at a seasonally adjusted 49.0 last month from 48.9 in March.

That is well below the average of 53.1 the survey has seen since it began in late 2010. The index has been below the 50 mark that indicates a deterioration in business conditions since February.

The new orders gauge fell to 47.5 from 48.4 with manufacturers pointing to weaker demand from energy clients. The Canadian economy is feeling the effect of the drop in the price of oil, a major export, and is expected to see no growth in the first quarter.

Despite the weakness in the index, there were signs that regions not tied to oil were picking up, said Craig Wright, chief economist at RBC.

“The regional breakdown suggests that outside of the energy weakness, prospects for manufacturing are improving from the conditions evident earlier in the year,” said Wright.

While new export orders also continued to shrink, the pace of contraction moderated, as some firms saw a boost from the drop in the Canadian dollar.

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