September 1, 2015 / 2:33 PM / 2 years ago

Canada manufacturing falters again in August

Production Associates inspect cars moving along assembly line at Honda manufacturing plant in Alliston, Ontario March 30, 2015.Fred Thornhill

OTTAWA, Sept 1 (Reuters) - - Canada's manufacturing sector turned down again in August, with activity contracting as output and employment declined, data showed on Tuesday.

The RBC Canadian Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 49.4 last month from 50.8 in July. A reading below 50 indicates growth in the sector contracted.

So far this year, the index has been below 50 in five out of eight months. Oil-exporting Canada has been hit by a slide in crude prices and the Bank of Canada has cut interest rates twice this year to try to stimulate the economy.

The report suggests that several sectors in the manufacturing industry continued to face headwinds, said Craig Wright, chief economist at RBC.

"We remain confident that, as the U.S. economy continues to strengthen and the Canadian dollar remains competitive, there will be an uptick in exports for Canadian manufacturers, offsetting some of the momentum lost in August," he said in a statement.

The forward-looking new orders component edged down to 50.3 from 50.9, while the employment subindex fell to its lowest level since February.

Reporting by Leah Schnurr; Editing by Meredith Mazzilli

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