Canadian manufacturing activity moved closer to stabilization in August as production and new orders fell at slower rates, but a decline in employment underscored an uncertain outlook and cost pressures rose to a 16-month high, data showed on Tuesday. The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) increased to 49.5 in August, its highest level since March, from 47.8 in July. Still, it was the 16th straight month the PMI was below the 50.0 no-change mark, the longest such stretch in data going back to October 2010. A reading below 50 indicates contraction in the sector.