June 3, 2013 / 1:33 PM / in 4 years

Canada manufacturing PMI strongest level in nearly a year

* PMI rises to 53.2 in May from 50.1 in April

* New orders, output growth strongest in 11 months

* Quebec firms posts strongest increase in new export orders; BC, Alberta weak

By Solarina Ho

TORONTO, June 3 (Reuters) - Canada's manufacturing growth expanded at its fastest pace in nearly a year in May, according to data released on Monday, underpinned by new orders which pushed output back into growth mode for the first time in three months.

The RBC Canadian Manufacturing Purchasing Managers' Index was up sharply at 53.2 in May after adjusting for seasonal variation, rising from 50.1 in April.

A reading above 50 indicates an expansion in growth.

"The Canadian manufacturing sector perked up considerably in May, thanks to renewed vitality in new orders and job creation," said Craig Wright, chief economist at RBC, in a statement.

"As we navigate through the remainder of 2013, we expect the sector's performance to improve further, boosting Canadian growth."

The more robust pace of growth supported some other recent data which signaled a broader economy that was getting back on track after many months of disappointment.

Gross domestic growth data on Friday showed that rising exports helped revive the economy during the first quarter of 2013 to its fastest pace in six quarters, following a lethargic second half of 2012. The economy grew at an annualized rate of 2.5 percent between January and March.

Earlier this month, retail sales data saw a sharp rise in volume, indicating a more robust-than-expected economy, though other data, including housing and employment, painted a slightly more mixed picture.

The pickup in manufacturing activity last month was also supported by the sub-readings, which showed new orders, output and new export orders notching the best performance in 11 months. Companies said economic conditions were improving in some key export markets, most notably the United States.

Production rose for the first time in three months among Canadian manufacturers, with one in four reporting larger volumes of new work, which in turn resulted in more employment.

The rate of job creation accelerated to its best level since last August and faster than the sub-index's average, while the backlog in work accelerated for the first time in eight months to a 20-month high.

Regionally, Alberta and British Columbia remained weaker, the only provinces to see a deterioration in manufacturing conditions last month. Quebec companies posted the strongest increase in new export orders.

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