September 1, 2016 / 1:32 PM / a year ago

Canada manufacturing growth cools in August on weak demand

Coffee pods move through the production process at the Club Coffee facility in Toronto in an undated photo supplied by Club Coffee March 9, 2016.Club Coffee/Handout via Reuters

OTTAWA, Sept 1 (Reuters) - The pace of growth in Canadian manufacturing cooled in August to its lowest level in six months as new orders slowed, suggesting the sector was failing to gain much traction, data showed on Thursday.

The RBC Canadian Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 51.1 last month from 51.9 in July. A reading above 50 shows growth in the sector.

Demand was weak both at home and abroad. New orders declined to 50.5 from 51.5, while export orders remained in contraction territory, though the gauge was able to edge up to 49.4 from 48.4.

Companies cited strong competition for new work, as well as subdued demand conditions. That weighed on the employment outlook, which fell to 50.9 from 52.4.

The figures show "Canada's manufacturing sector continues to struggle for momentum," said Tim Moore, senior economist at survey compilers IHS Markit.

Canada's economy contracted at its worst pace in seven years in the second quarter, data showed on Wednesday, though economists and policymakers still expect to see a rebound in the second half of the year.

Reporting by Leah Schnurr, Editing by Chizu Nomiyama

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