RBC PMI shows slower Canadian manufacturing growth

Wed Feb 1, 2012 9:39am EST
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By Jon Cook

TORONTO (Reuters) - Canadian manufacturing growth slowed sharply in January, with output and new order gains well down from December, in the latest sign that Europe's economic crisis slowing the Canadian economy.

The RBC Canadian Manufacturing Purchasing Managers' Index, released on Wednesday, slipped to 50.6 in January from 54.0 a month earlier. While above the 50-point mark that separates expansion from contraction, it was the weakest reading since the survey began in October 2010.

"Global economic uncertainty, particularly rooted in the euro zone, weighed heavily on the Canadian manufacturing sector in the first month of 2012," Craig Wright, chief economist at Royal Bank of Canada, said in a statement.

Output among manufacturers slightly outpaced the increase in new orders, but both significantly lagged December totals. Slumping demand from abroad was a key contributor, with almost 20 percent of respondents reporting lower volumes of new export orders.

"Canada's modest recovery may be jeopardized if European policymakers fail to contain the sovereign debt crisis," noted Wright.

The survey's results were further evidence the Canadian economy is slowing. Data on Tuesday showed gross domestic product shrank by 0.1 percent in November, its first contraction since May.

The next major gauge of economic health will come on Friday with January's employment data, which is expected to show a slight rise in net new jobs over December totals, according to a Reuters poll of analysts.

The RBC PMI data revealed manufacturing sector jobs fell in January for the first time in the survey's 16-month history, mostly due to the slower rate of new order growth.   Continued...

<p>A partially assembled Chrysler minivan works its way down the assembly line at the Windsor Assembly Plant in Windsor, Ontario in this January 18, 2011 file photo. REUTERS/Rebecca Cook</p>