July 3, 2012 / 1:33 PM / in 5 years

Canada manufacturing PMI hits 9-month high in June

TORONTO (Reuters) - The pace of growth in Canadian manufacturing activity climbed in June to its highest level since September, helped by rising orders from abroad, according to data released on Tuesday.

Workers piece together outerwear on the manufacturing floor of Canada Goose's facility in Toronto January 17, 2012. REUTERS/Fred Thornhill

The RBC Canadian Manufacturing Purchasing Managers’ Index rose to a nine-month high of 54.85 in June from 54.72 in May. The average reading for the second quarter rose to 54.3 from 51.6 for the first three months of the year.

A reading above 50 indicates expansion.

“Conditions across the sector are favorable, and we expect that continued gains in employment and an uptick in exports will help contribute to further economic expansion in 2012,” Craig Wright, chief economist at Royal Bank of Canada, said in a statement.

The report showed manufacturing employment in Canada increased for the fifth successive month in June, even though the rate of job creation slowed from the pace seen in May.

The report was in sharp contrast to U.S. manufacturing data released on Monday.

Manufacturing in the United States shrank in June for the first time in nearly three years as new orders plummeted, the figures showed, a signal that the U.S. economic recovery may be slowing.

The U.S. Institute for Supply Management said its index of national factory activity fell to 49.7 in June from 53.5 the month before, missing expectations of 52.0 in a Reuters poll of economists, and below even the lowest forecast.

Canada’s manufacturing sector was hit hard by the last recession and has struggled with what the Bank of Canada has described as the persistent strength of the Canadian dollar.

But the RBC PMI index has shown steady gains since January, when the index hit its lowest level since it started tracking the manufacturing sector in October 2010.

Both the new orders and output components of the RBC PMI index rose in June. Also, the rate of growth of new export orders increased for the fourth straight month.

“Canada’s manufacturing sector continued to be supported by a strong increase in new orders in June. New export orders were also up, with a solid improvement in Canadian export market conditions reported,” Cheryl Paradowski, chief executive at the Purchasing Management Association of Canada, said in a statement.

News in the manufacturing sector has not been entirely positive. Statistics Canada manufacturing sales data, which lags the release of the RBC PMI, last month showed a surprise decline in April sales.

Broad economic growth in Canada has been steady. Government data last week showed a rebound in oil output helped deliver surprisingly strong Canadian economic growth of 0.3 in April, providing a better-than-expected start to the second quarter.

Editing by Jeffrey Hodgson; and Peter Galloway

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