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GM workers use human assistance automation to weld vehicle doors at an assembly plant in Oshawa, Ont., on March 19, 2021.Nathan Denette/The Canadian Press

Canadian manufacturing activity expanded for the 11th straight month in May as firms added to head count to deal with a backlog of work, but the pace of growth eased further from March’s record level, data showed on Tuesday.

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) dipped to a seasonally adjusted 57.0 in May from 57.2 in April. The level was 58.5 in March, the highest reading in the 10-1/2-year history of the survey.

The index has been above the 50 threshold, which shows growth in the sector, every month since last July.

“May PMI data reveals another robust expansion across Canada’s manufacturing sector,” Shreeya Patel, an economist at IHS Markit, said in a statement.

“Policy-makers will particularly welcome the stronger uplift in work force numbers after the country saw the unemployment rate climb post-pandemic,” Patel said. “A sustained increase in backlogs suggests staffing in the manufacturing sector will continue to grow over the coming months.”

The employment index rose to a 5-month high of 54.4 from 53.2 in April, while backlogs of work accumulated for the tenth straight month. It reflected insufficient staff as well as material shortages and shipment delays, IHS Markit said.

Reflecting lengthening lead times, the suppliers’ delivery times index fell to 29.2 from 30.5 in April, the third lowest reading in the survey’s history, while the measure of output prices rose to a record level of 65.9 from 63.3.

That adds to recent evidence of inflation pressures building in Canada. The Bank of Canada said in April it expects the move higher in inflation to be temporary.

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