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TORONTO (Reuters) - Canadian manufacturing growth rebounded in December after a two-month decline as both new orders and output jumped, suggesting a slowdown in the last quarter of 2011 may not be as severe as many feared, data on Tuesday showed.
The RBC Canadian Manufacturing Purchasing Managers' Index came in at 54.02 in December, above the level of 50 that separates expansion from contraction, thought it still remained weaker than the series average.
The index, launched in 2011 by Royal Bank of Canada (RY.TO) and produced by research firm Markit, rose from 53.31 in November.
The RBC PMI data have signaled improving business conditions in each month since the survey began in October 2010.
After drops in October and November, new export orders also climbed in December, while the rate of input price inflation eased further during the latest survey period, marking the slowest pace in the 15-month series history.
"The Canadian manufacturing sector has demonstrated its resilience as the global economy faces some strong headwinds," said Craig Wright, chief economist at Royal Bank of Canada.
"After some temporary setbacks in 2011, Canada's economy is set to grow by 2.5 percent in 2012, provided that European policymakers contain the sovereign debt crisis in that region."
Looking back to 2011, data last month showed Canada's economy stalled in October after four consecutive months of growth, pointing to a fourth-quarter slowdown as increasing global uncertainty mutes expectations for 2012.
But the PMI survey showed new order volumes expanded in December and production was particularly robust. Output increased at the fastest rate since April. Stocks of finished goods were also depleted, while backlogs were reduced for the third month running.
Meanwhile, overall employment in Canada's manufacturing sector appeared to rise solidly as approximately 19 percent of firms hired additional staff, compared to 13 percent that cut jobs.
Editing by Jeffrey Hodgson