April 1, 2016 / 1:42 PM / a year ago

Canada manufacturing sector grows in March for first time in eight months

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Production Associates inspect cars moving along assembly line at Honda manufacturing plant in Alliston, Ontario March 30, 2015.Fred Thornhill

OTTAWA (Reuters) - The pace of growth in the Canadian manufacturing sector grew for the first time in eight months in March as the weaker Canadian dollar gave exports a boost, data showed on Friday.

The RBC Canadian Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing business conditions, rose to a seasonally adjusted 51.5 last month from 49.4 in February.

It was the highest level since December 2014 and the first time the index has been above the 50 threshold that marks growth in the sector since August of last year.

The measure of new export orders rose to 53.1 from 51.9 with companies saying that the drop in the Canadian dollar had helped lift sales to U.S. clients.

"The low Canadian dollar contributed to further improvement in export volumes during the first quarter of 2016 and a return to growth in the manufacturing sector," said Craig Wright, chief economist at RBC.

Gauges of output and overall new orders rose as well, while the weaker loonie also lifted businesses' input prices.

The report will likely add to expectations the economy fared better than anticipated in the first quarter. Canada was in a mild recession last year as the oil-exporter was hit by the drop in crude prices, but recent data has shown the economy got off to a better start in 2016.

Reporting by Leah Schnurr, Editing by Chizu Nomiyama

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