The RBC Canadian Manufacturing Purchasing Managers' Index was 50.4 last month after adjusting for seasonal variation, compared with roughly the same figure in November, when the index marked its the weakest reading since data collection began in October 2010.
The PMI average for the fourth quarter as a whole was 50.7, down from 52.8 in the previous quarter, and was also the lowest quarterly reading in more than two years.
The index was precariously close to contraction but still remained above the 50 mark that separates expansion from deterioration.
"A weak global economy and a strong loonie have weighed somewhat on the broader sector and contributed to a flat PMI reading compared to November," Craig Wright, chief economist at Royal Bank of Canada, said in a statement, echoing policymakers' concerns that the persistent strength of the Canadian dollar is hurting the country's export-driven economy.
"That said, as the cloak of uncertainty is removed from the global economy in the coming months related to fiscal policy in the US and elsewhere, we expect that demand for Canadian exports will rise, as will investment and hiring across the economy."
Although new orders were up, partly reflecting greater demand and new product launches, output levels were mostly unchanged from November. Meanwhile, employment continued to rise, but the pace of job creation was at an 11-month low, and input prices rose at the slowest pace since July.
Companies reported passing on greater costs to clients by raising their output charges modestly.
Q4 GDP OFF TO SLOW START
The manufacturing data came after a government report last month that showed the Canadian economy grew by just 0.1 percent in October from September, indicating a very slow start to the fourth quarter amid foreign and domestic economic woes.
Canada fared better than most of its rich industrialized peers in the aftermath of the 2007-09 global financial crisis, prompting the Bank of
Canada in 2010 to become the first central bank in the Group of Seven to tighten monetary policy after the recession.
Center>Copyright Reuters, 2013