Reuters reported that the pace of Canadian manufacturing increased in July 2011 for the first time in four months as new orders picked up, though the high flying Canadian dollar tempered some of the momentum.

The RBC Canadian Manufacturing Purchasing Managers' Index, launched earlier this year by Royal Bank of Canada 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.

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 2011, but the rate of employment creation actually eased to the slowest since November.

Mr Paul Ferley, assistant chief economist at Royal Bank of Canada, said in a statement that "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."

Canadian manufacturers have had an uneven recovery since the financial crisis. Export reliant manufacturers have struggled with weak US demand and the high flying domestic currency, which has made their goods more expensive in foreign markets.

Data showed that the Canadian economy shrank unexpectedly in May as bad weather, a strong Canadian dollar, and weak US demand took a toll.

(Sourced from www.reuters.com)