Canada's factories seeing a rebound in June

Canada's manufacturing sector was showing signs of a solid recovery in June, with new business growth at the strongest level yet seen in 2014.

Domestic demand drivers increase in new orders while U.S. exports tick up

Employees work on the SeaDoo assembly line at the Bombardier Recreational Products plant in Valcourt, Que. The June survey of Canadian manufacturers shows a rebound in output and new orders. (Ryan Remiorz/Canadian Press)

Canada's manufacturing sector was showing signs of a solid recovery in June, with new business growth at the strongest level yet seen in 2014.

The Purchasing Managers Index from Royal Bank, a measure output and anticipated expansion by factories, hit 53.5 across Canada in June, up from from 52.2 in May. Any level above 50 indicates growth.

“The latest RBC PMI data indicates that in June, Canada’s manufacturer’s experienced the best conditions for growth in half a year,” said RBC chief economist Craig Wright in a statement.

“We expect that these conditions will further improve going forward supported by the strengthening global economy, increases in external demand for domestic goods and depreciating Canadian dollar.”

Manufacturers surveyed pointed to more orders from clients in the U.S. in the past month though much of the new orders had come from expanded domestic demand.

Many reported they had hired more staff and there was also a rapid rise in backlogs of work.

The improvement was seen across the country, with the PMI at 53.9 in Alberta and B.C., 54.1 in Quebec, a sharp rise and 52.7 in Ontario and the rest of Canada.

The rising Canadian dollar – it hit 94 cents US today – may dampen the expansion in exports, but it could also make a difference in costs to factories. A number of firms survey said the depreciating dollar had pushed up prices for imported raw materials and some also said rising oil prices were pushing up their costs.

The report comes a day after reports that China’s June PMI hit a six-month high of 51, indicating the start of a recovery in a market that has spurred world growth over the past five years.

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