December 1, 2011 / 2:39 PM / in 6 years

RBC PMI shows slower manufacturing growth

TORONTO (Reuters) - Canadian manufacturing growth slowed in November to the weakest level in four months as worsening global economic conditions took a toll on the domestic environment, data on Thursday showed.

The RBC Canadian Manufacturing Purchasing Managers’ Index came in at 53.31 in November, above the level of 50 that separates expansion from contraction.

The index, launched this year by Royal Bank of Canada and produced by research firm Markit, fell from 53.66 in October, the second decline after a three-month climb.

The RBC PMI data have signaled improvement in each month since the survey began in October 2010.

While overall business conditions improved, including new orders and output, the rates of increase eased since October to five- and four-month lows respectively.

New export orders fell for a second straight month in November, though only marginally, and the rate of decline weakened since October.

“The latest RBC PMI numbers show that global uncertainty is weighing on the Canadian manufacturing sector,” said Craig Wright, chief economist at Royal Bank of Canada.

“Although the Canadian numbers continue to point to an expansion in the sector compared to declines in other parts of the globe, the trend over the last couple of months has been one of slowing growth.”

Broader domestic economic data has also been mixed. Data on Wednesday showed Canada’s economy grew more than expected in the third quarter following a contraction in the second quarter, but recent employment numbers were surprisingly dismal.

Meanwhile, the PMI survey showed the rate of input price inflation slowed further from April’s peak to the weakest in the 14-month survey history.

Still, higher input costs were felt, with prices for fuel and steel noted in particular.

On the upside, manufacturing employment in November increased, with about a fifth of surveyed firms hired additional staff, compared with 12 percent that reduced their payrolls. Employers generally linked job creation to further output growth.

Survey respondents said they tried to pass on greater cost pressures to clients by raising output charges in November. However, average selling prices rose only fractionally, with a number of monitored companies commenting on stronger competitive pressures.

Editing by Jeffrey Hodgson

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