Assembly of the Ford Flex takes place at the companys assembly plant in Oakville, Ontario. (Photo: Sam VarnHagen/Ford)

TORonTO The Royal Bank says expansion in Canadas manufacturing sector continued in August for a fifth consecutive month, but the rate of growth was modest and below average.

The RBC purchasing managers index came in at 52.1 for August, little changed from Julys reading of 52.

However, the monthly survey, conducted in association with Markit, remained above 50, which means the manufacturing sector continued to expand.

It also found that both output and new orders rose at modest rates in August, reflecting greater client demand in both the domestic and export markets.

RBC says firms hired additional staff in light of higher activity levels, with the rate of employment growth accelerating to its highest level since May.

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On the price front, input cost inflation picked up to a five-month high as commodities, including oil and metals, became more expensive, while output charges fell for the second month running.

RBC chief economist Craig Wright said Tuesday that the continued increases suggest that some of the recent shocks to the economy have been mitigated by strength elsewher.

We expect that improving U.S. demand will continue to provide a boost to the manufacturing sector for the balance of the year, he said.

The index fell below 50 in March for the first time since the survey was created 2 1/2 years ago, but has been steadily improving ever since.