February 2, 2015 / 2:38 PM / 3 years ago

Canada manufacturing growth weakest in 21 months in January

TORONTO, Feb 2 (Reuters) - The pace of growth in the Canadian manufacturing sector cooled in January to its weakest level in over a year-and-a-half as new orders slowed and employment shrank, data showed on Monday.

Canada's Prime Minister Stephen Harper views a robot that wrote "Canada" and drew a maple leaf at electronics manufacturing services company Celestica in Toronto in this file photo taken on December 4, 2014. REUTERS/Mark Blinch

The RBC Canadian Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 51.0 last month from 53.9 in December. It was the lowest level since April 2013.

A reading above 50 shows growth in the sector. The gauge of new orders also slipped to 51.0 from 53.9, while hiring contracted to 49.4 from 52.9, ending 11 months of growth.

Anecdotal evidence from firms surveyed suggested softer demand in the oil and gas sector weighed on overall new orders last month, the report said. The price of oil has more than halved in recent months, potentially problematic for Canada, which counts oil as a major export.

“The latest data indicates that Canada’s manufacturers started the year with concerns around uncertainty about global growth prospects, financial market volatility and a sharp drop in oil prices,” Craig Wright, chief economist at RBC, said in a statement.

Still, an eventual recovery in oil prices, a strong U.S. economy and cheaper Canadian dollar should help support manufacturing and offset weakness in the energy sector, he said.

Several other key subcomponents also declined, including output, backlogs of work and new export orders.

Reporting by Leah Schnurr, Editing by Chizu Nomiyama

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