By Fergal Smith
TORONTO (Reuters) - Canadian manufacturing activity moved closer to stabilizing in February as employment rose alongside a slower downturn in output and new orders, data showed on Friday.
The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 49.7 in February from 48.3 in January, posting its highest level since April.
A reading below 50 indicates contraction in the sector. The PMI has been below that threshold since May, which is the longest such stretch in data going back to October 2010.
"Canada's manufacturing PMI moved closer to the crucial break-even 50.0 mark during February amid slower falls in both output and new orders," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.
"Although continuing to decline, reflective of some ongoing client hesitancy, rates of contraction were small in the context of recent months and reflect a steady underlying improvement in global market conditions."
The output index rose to 49.8 from 48.6 in January and the new orders index was at 48.7, up from 45.5, while the employment index climbed to 50.7 from 49.6
"Firms expressed their optimism about the future by adding to their staffing levels for the first time in three months," Smith said.
Inflation measures were mixed. The input price index edged up to 53.9 from 53.3 in January, boosted by ongoing supply chain frictions, while the measure of output prices slipped to its lowest level since June at 51.7.
Still, the future output index was only slightly lower at 60.5 after notching a six-month high in January, underpinned by hopes that an improved economic climate will bolster sales over the coming 12 months.