By Fergal Smith

TORONTO, March 2 (Reuters) - Canada's manufacturing sector grew for a second straight month in February as new business increased despite weak export sales and rising inflation pressures, data showed on Monday.

The S&P Global Canada Manufacturing Purchasing Managers' Index $(PMI)$, a measure of factory sector health, rose to 51.0 last month from 50.4 in January, posting its highest level since January 2025. A reading above 50 shows expansion in the sector.

“February data indicated a positive month for the Canadian manufacturing sector as new orders returned to growth despite a backdrop of softening export sales and ongoing challenges arising from U.S. tariffs," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement.

The new orders index rose to 50.6 from 49.3 in January, marking the first month of growth since January last year, while the measure of new export orders was at 46.6, up from 44.6.

U.S. tariffs on critical sectors, such as autos, steel and aluminum have hit Canadian exports hard.

"Greater workloads and signs of a turnaround in domestic demand also contributed to the fastest rise in employment for 13 months and a marginal rebound in purchasing activity," Smith said.

The employment index rose to 51.0 from 50.6 in January, driven by improved order books and long-term expansion plans. A measure of firms' optimism climbed to the highest level since December 2024.

The input price index edged up to 59.1 from 59.0 in January, marking its highest level since August. Firms pointed to rising metals prices and higher imported raw material costs.

A measure of factory gate prices also rose, touching its highest level since March 2025.

(Reporting by Fergal Smith; Editing by Chizu Nomiayma)

((fergal.smith@thomsonreuters.com; +1 647 480 7446))