Canada manufacturing growth cools to 9-month low in Jan

Mon Feb 3, 2014 9:30am EST
 
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TORONTO Feb 3 (Reuters) - The pace of growth in Canada' manufacturing sector cooled again in January, hitting its lowest level in nine months, data showed on Monday.

The RBC Canadian Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 51.7 last month from 53.5 in December.

The reading was above 50, and therefore shows there was still growth in the sector, though the rate has been slowing for the past three months.

The index's forward-looking new orders measure slipped to 52.9, while the employment gauge shrank to 49.8, the first time staffing levels have fallen in two years.

The weakness in hiring bodes poorly for the country's employment report due at the end of the week, though that report is forecast to show a snapback in January after the economy unexpectedly shed jobs at the end of last year.

The purchasing manager's index of input prices rose to 59, its highest level since April 2012. The Canadian dollar came under significant selling pressure in January, which would generally make it more expensive for Canadian companies to import materials from abroad.

Still, a weaker currency can also be a boon for exporters and manufacturers. The index's measure of new export orders rose to 53 from 50.9 in December.

"Underlying economic conditions - such as stronger growth in the U.S. economy and a weaker Canadian dollar - remain supportive for the outlook for domestic manufacturing in the period ahead," Craig Wright, chief economist at RBC, said in a statement.