* RBC PMI rises to 51.8 in Feb from 50.6 in Jan
* Second-lowest PMI in survey's 17-month history
* Hiring rises after falling for first time in Jan
* Higher oil and metal prices increase costs
By Jon Cook
TORONTO, March 1 The pace of growth in
Canadian manufacturing picked up modestly in February after
weakening the previous month, helped by a pickup in output and
new orders despite a fall in export demand.
The RBC Canadian Manufacturing Purchasing Managers' Index,
released on Thursday, edged up to a reading of 51.8 in February
from 50.6 in January. While the index was above the 50-point
mark that separates expansion from contraction, it was still the
second weakest since the survey began in October 2010.
"While we observed a modest improvement from January's sharp
slowing, the Canadian manufacturing sector's growth rate
remained tepid in February," Craig Wright, chief economist at
Royal Bank of Canada, said in a statement.
Growth in output among manufacturers outpaced the increase
in new orders, but both significantly lagged the survey's
About 22 percent of respondents reported a larger volume of
new orders. New export orders, however, were down for a second
straight month in February, hitting their lowest level in 17
months of data collection.
Also hurting manufacturers in February were rising oil and
metal prices, which increased operating costs.
"Panelists particularly mentioned higher costs for steel and
fuel, with the overall rate of input price inflation the
strongest since August 2011," Cheryl Paradowski, chief executive
at the Purchasing Management Association of Canada, said in a
The rise in new work intakes led to a hiring bump in
February after the sector lost jobs in January. About 14 percent
of surveyed companies added staff last month.
"The slight uptick in manufacturing employment is in line
with our view that Canada's broader labor market will shake off
its recent slump and start to ramp up again in the months
ahead," Wright said.
Canada added just 2,300 net new jobs in January and the
unemployment rate rose to 7.6 percent from 7.5 percent in
December. February jobs data will be released next week.
Economic growth has also slowed, with the latest monthly
gross domestic product numbers, for November, showing a slight
The European debt turmoil and a choppy U.S. recovery have
forced the Bank of Canada to keep its overnight target rate at a
very low 1 percent since 2010 in an effort to stimulate the
The median forecast in a Reuters poll released on Wednesday
was that the central bank will not interest raise rates until
the second quarter of 2013.