07/02/2013 11:25 EDT | Updated 09/01/2013 05:12 EDT

Canada's manufacturing sector expanded more modestly in June: RBC

TORONTO - Canada's manufacturing sector continued to expand in June, although at a more modest pace than the previous month, according to an index of Canadian manufacturing intentions.

The RBC purchasing managers index dipped to 52.4 in June from 53.2 in May. However, the monthly reading by the Royal Bank (TSX:RY), conducted in association with Markit, remained above 50, which means the manufacturing sector continued to expand.

The survey found that manufacturers hired new workers in June as they received a higher volume of new orders, but that increased costs put pressure on profit margins.

The index fell below 50.0 in March for the first time since the survey was created 2 1/2 years ago.

Since then it's been steadily improving, with May recording the strongest growth as intentions rose to an 11-month high.

"Canada’s manufacturing sector continued to expand in June — a sign that the slowdown earlier this year was, in fact, a temporary blip," RBC chief economist Craig Wright said in a statement.

"Moving into the second half of 2013, an anticipated strengthening in international demand will help the sector shake off its relatively lacklustre performance it has recorded over the past year," Wright said.