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TORONTO – Royal Bank of Canada (TSX:RY) says the Canadian manufacturing sector was stagnant in December, but there’s reason for optimism ahead.

The banks says its Canadian Manufacturing Purchasing Managers’ Index was flat at 50.4 in December as the weak global economy and strong loonie weighed on the sector.

The RBC index averaged 50.7 over the entire fourth quarter — its lowest quarterly reading since data collection began in October 2010 — and a drop from 52.8 during the third quarter.

But RBC chief economist Craig Wright says demand for Canadian exports is expected to rise, along with investment and hiring across the economy, as fiscal policy in the U.S. and elsewhere becomes more clear in the coming months.

The survey found manufacturing business conditions improved in Alberta, British Columbia and Ontario in December.

RBC conducted the survey in association with Markit, a global financial information services company, and the Purchasing Management Association of Canada.

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