TORONTO -- A monthly gauge of the Canadian manufacturing sector hit its lowest level in nearly two years in January.

The RBC Canadian purchasing managers index dropped to 51 last month, signalling that manufacturers expected only a marginal improvement in business conditions at the start of 2015.

That contrasts to an optimistic view in late 2014, prior to a sudden collapse in crude oil prices over the past 2 1/2 months.

A measure above 50 on the RBC PMI indicates the manufacturing sector is expanding.

The RBC index hit 55.3 in both October and November -- the highest since November 2013 -- and remained elevated at 53.9 in December.

The January decline to 51 marked a bigger decline in overall confidence among Canadian manufacturers and the lowest level for the index since April 2013.

Royal Bank says the latest survey of Canadian purchasing managers found output and new business grew at much slower rates in January than in the previous month and that employment numbers dropped for the first time since early 2014.

Statistics Canada reported last week that weakness in the Canadian manufacturing sector was a primarily reason for an unexpected decline in the country's gross domestic product, which declined by 0.2 per cent from October.

The global price of crude oil -- a major Canadian export and a key economic driver, including for the manufacturing sector -- has dropped well below US$50 a barrel from well above US$100 a barrel last summer. The decline accelerated in late November after Saudi Arabia announced it wouldn't reduce oil output to support the price of crude.

On Monday, a benchmark crude was trading at US$48.54 a barrel -- down from about $79 a barrel in early November.