Canadian factory sales rose in February at the fastest pace since July 2011, a broad-based gain led by durable goods such as automobiles.
Sales climbed 2.6 percent to C$49.6 billion ($48.5 billion), following a revised January decline of 0.6 percent, Statistics Canada said today in Ottawa. The increase exceeded all 18 economist forecasts in a Bloomberg survey with a median estimate of a 0.6 percent gain.
Bank of Canada Governor Mark Carney is relying on exports and business investment to drive economic growth through next year, and economists say signs of global weakness will lead him to keep his policy rate at 1 percent tomorrow, where it’s been since September 2010. Even with today’s gain, total shipments remain below the peak of C$53 billion set in July 2008.
“While the pickup in the volume of manufacturing sales in February is encouraging, part of the increase reflected rising sales in the lumpy aerospace component which have much more muted implications,” said Nathan Janzen, an economist at Royal Bank of Canada in Toronto.
Aerospace sales jumped 15.5 percent to C$1.35 billion in February, while motor vehicle assembly rose 13.5 percent to C$4.11 billion. Sales rose in 14 of 21 categories tracked by Statistics Canada, accounting for 85 percent of production, the agency said.
Bombardier Inc. (BBD/B) said yesterday it won a $195 million contract for a Florida commuter rail project, according to a statement from the Montreal-based company. General Motors Co. (GM) on March 8 said it would invest C$250 million at a factory in Ingersoll, Ontario.
The Canadian dollar rose 0.4 percent to C$1.0216 per U.S. dollar at 9:35 a.m. in Toronto. One dollar buys 97.89 U.S. cents. Yesterday it touched C$1.0259, a 1.2 percent drop that was the biggest since Dec. 8, 2011.
Factory sales excluding price changes, a better indicator of the industry’s contribution to economic growth, rose 2.5 percent in February.
Unfilled orders rose a fourth month to a record high in February, by 0.4 percent to C$69.6 billion. Inventories rose 0.9 percent to C$66.1 billion, with the ratio of factory stockpiles to sales falling to 1.33 from 1.36.
New orders fell 4 percent to C$49.9 billion, following a 3.5 percent gain in the previous month.
From a year earlier, manufacturing sales rose 2.3 percent. That kind of growth is needed to drive Canada’s expansion, said Mazen Issa, Canada macro strategist at TD Securities in Toronto.
“Canada’s export sector will need to be revived as part of the broader narrative of a rotation away from domestic demand driven growth,” Issa wrote in a note to clients. “This will take hold towards the end of the year and we look for the manufacturing sector to have a critical role.”
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com