Canadian factory activity holds near record-setting pace in April

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Workers are seen at Bri-Steel Manufacturing, a manufacturer and distributer of large diameter seamless steel pipes, in Edmonton

TORONTO (Reuters) - Canadian manufacturing activity grew for the 10th straight month in April as production and new orders climbed, with the pace easing only slightly from the previous month's record level, data showed on Monday.

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

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

"Latest PMI data revealed a confident start to Q2," Shreeya Patel, an economist at IHS Markit, said in a statement. "Despite moderating form March's near-survey peaks, output and new order growth were robust."

The measure of output dipped to 55.0 from 57.7 in March, while the new orders index was at 56.9, down from 58.0. Growth in new orders was helped by government stimulus policies, IHS Markit said, pointing to anecdotal evidence.

Last month, Canadian Prime Minister Justin Trudeau's government lined up billions in new spending to provide emergency support during a virulent third wave of COVID-19.

Still, tightening of economic restrictions has weighed on sentiment. It was below the long-run trend level, and together with port congestion has led to another lengthening in supplier delivery times, IHS Markit said.

In addition, the data showed output prices rising at the fastest pace on record. Higher raw material costs and strong demand allowed firms to pass on higher costs during the month, said IHS Markit.

The Bank of Canada said last month that it expects inflation to temporarily rise to about 3% this year.

(Reporting by Fergal Smith; Editing by Chizu Nomiyama)