June 1, 2016 / 1:37 PM / a year ago

Canada manufacturing growth little changed in May

Production Associates inspect cars moving along assembly line at Honda manufacturing plant in Alliston, Ontario March 30, 2015. REUTERS/Fred Thornhill

OTTAWA, (Reuters) - The pace of growth in the Canadian manufacturing sector was little changed in May as measures of new orders and employment both slowed, data showed on Wednesday, the latest sign the economy is struggling to gain momentum.

The RBC Canadian Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, dipped to a seasonally adjusted 52.1 last month from 52.2 in April. It was the third month in a row the index has been above the 50 threshold that indicates growth in the sector.

Although the output index edged up to 52.8 from 52.1, new orders pulled back to 51.9 from 52.4 and employment slipped to 52.2 from 52.4.

Export orders shrank to 49.1 from 51.0. A sustained acceleration in export activity is key to the Bank of Canada’s outlook, though the economy has yet to see it.

Craig Wright, chief economist at RBC, said the decline in export sales “raises questions about Canada’s transition to a more export-led expansion.”

The decline ended six consecutive months of growth for the export gauge. Some companies cited subdued demand from customers, particularly outside of the United States.

The Canadian economy continues to struggle with the impact of cheaper oil, a major export for the country. Data released on Tuesday showed growth accelerated at a weaker pace than expected in the first three months of the year and lost steam at the end of the quarter, boding poorly for a second quarter that is expected to be further impacted by Alberta’s wildfires.

Reporting by Leah Schnurr; Editing by Meredith Mazzilli

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