Canadian factory activity rises to 7-month high on improving demand

TORONTO, March 1 (Reuters) - Canadian manufacturing activity expanded at a faster pace in February as measures of output and new orders both rose to nine-month highs, while inflation pressures continued to ease, data showed on Wednesday. The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 52.4 in February from 51.0 in January, posting its highest level since July. Before January's reading, the index had been below the 50 threshold that separates growth from contraction for five consecutive months. "February's data provided a relatively positive set of data concerning the health of the Canadian manufacturing economy," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. "Growth rates for a range of variables improved, most notably for output and new orders amid reports of firmer market demand." The output index was at 52.2, which was its highest level since May and up from 51.0 in January. The new orders index also climbed to its highest level since May, rising to 53.3 from 50.3 even as new export orders remained in contraction for a ninth straight month. "Lower inflation was also seen as a supportive demand factor," Smith said. "Amid signs of more stability in supply chains, these factors all helped to support an improvement in confidence over the month and partly explained another round of job creation in the sector." The measure of input prices fell to its lowest level since July 2020 at 57.9, down from 58.6 in January, while the future output measure was at 61.6, its highest since July. (Reporting by Fergal Smith; Editing by Chizu Nomiyama)