* PMI rises to 53.1 in July from 52.8 in June
* First increase for index after 3-month decline
* New orders rise, while employment growth slows
By Claire Sibonney
TORONTO, Aug 2 The pace of Canadian
manufacturing increased in July for the first time in four
months as new orders picked up, though the high-flying Canadian
dollar tempered some of the momentum, data released on Tuesday
The RBC Canadian Manufacturing Purchasing Managers' Index,
launched earlier this year by Royal Bank of Canada (RY.TO) and
produced by research firm Markit, rose to 53.1 in July from
52.8 in June.
The latest reading was above the level of 50 that separates
growth from contraction.
The PMI is produced with input from the Purchasing
Management Association of Canada. Data collection from about
400 companies, big and small, began in October 2010.
"The uptick in the new orders index that indicated a solid
rate of expansion, coupled with improved business conditions
across the country, bode well for Canada's manufacturing sector
overall," Paul Ferley, assistant chief economist at Royal Bank
of Canada, said in a statement.
The new orders index rose to 53.47 in July from 52.15 in
Cheryl Paradowski, chief executive at the Purchasing
Management Association of Canada, said the index mainly
reflected stronger demand in Canada. New export orders
increased only marginally during the latest survey period.
"Meanwhile, although input price inflation eased to a
seven-month low in July, surveyed firms particularly mentioned
fuel and transport as increasing in cost," she added in a
Overall, the data showed the rate of expansion in
manufacturing activity was solid and slightly faster than that
registered in June, which also reflected a rise in output.
The report also showed that the manufacturing sector added
jobs in July, but the rate of employment creation actually
eased to the slowest since November.
Ferley warned that modest gains in production and the
strong Canadian dollar may offset some of the momentum in the
sector in the second half of the year.
Canadian manufacturers have had an uneven recovery since
the financial crisis. Export-reliant manufacturers have
struggled with weak U.S. demand and the high-flying domestic
currency, which has made their goods more expensive in foreign
Data on Friday showed the Canadian economy shrank
unexpectedly in May as bad weather, a strong Canadian dollar,
and weak U.S. demand took a toll. [nN1E76S093]
(Editing by Peter Galloway)