Canadian manufacturing PMI expands modestly in February

Fri Mar 1, 2013 9:29am EST

* PMI rises to 51.7 in Feb from 50.5 in Jan

* Output up for third straight month, highest since Aug

* Job creation bounces after Jan low, new orders up

By Alastair Sharp

TORONTO, March 1 (Reuters) - The pace of Canadian manufacturing activity picked up modestly in February, notching the strongest expansion in five months, according to data released on Friday, though growth was still slower than the historical norm.

The RBC Canadian Manufacturing Purchasing Managers' Index was at 51.7 last month after adjusting for seasonal variation, rising from a weak 50.5 in January. A reading above 50 represents expansion.

"The Canadian manufacturing sector fended off the February blahs with strengthening output and employment growth," Royal Bank of Canada's chief economist, Craig Wright, said in a statement released with the data.

Companies increased production in the month as new orders increased, leading many to hire more workers, the data showed.

But the slow pace of growth highlighted a broader economy that was struggling to live up to even restrained growth forecasts.

"Growth remained below par, with both output and new orders increasing only modestly over the month," said Cheryl Paradowski, chief executive of the Purchasing Management Association of Canada.

The PMI data showed output rose for the third straight month after three months of declines, while new orders also increased modestly.

The rate of job creation quickened after hitting a 12-month low in January. Input price inflation rose, albeit at a weak rate, while output prices rose at their fastest clip in 10 months.

The strongest upturns in business conditions were noted by manufacturers in Alberta and British Columbia, while Ontario and Quebec eked out marginal gains or slight losses.

RBC's Wright said increased demand appetite from the United States, China and Japan boosted Canadian exports, but warned that the data didn't indicate a robust recovery yet.

"While it would be premature to suggest that the global economy is treading on a much brighter path, these modest improvements hint that better days may lie ahead," he said.

Statistics Canada said on Thursday that an increase in exports to the United States helped narrow Canada's current account deficit in the fourth quarter.

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