Canadian factory sales rose at the fastest pace in five months in July on gains for makers of commodities from crude oil to lumber to fabricated metals.
Sales climbed 1.7 percent to C$49.5 billion ($48 billion), Statistics Canada reported today from Ottawa, with the total boosted by upward revisions to the prior two months. The gain exceeded all 18 economist forecasts in a Bloomberg survey with a median of 0.5 percent.
The report adds to signs the economy is picking up after a slump in exports and investment late last year and disruptions in the second quarter from flooding in Alberta and a Quebec construction strike. The factory gain may contribute to the world’s 11th largest economy rebounding to growth of 0.7 percent in July after June’s 0.5 percent drop according to Royal Bank of Canada economist Nathan Janzen.
“The strength in July was encouraging,” Janzen said in a telephone interview from Toronto. “The weakness in June didn’t make sense.” Statistics Canada revised the prior month’s factory sales decline to 0.1 percent from 0.5 percent.
Petroleum and coal sales rose 2.4 percent to C$7.03 billion, the highest since February, as prices rose. Fabricated metal sales climbed 5.9 percent to C$2.81 billion, and wood products gained 6.3 percent to C$1.97 billion, bringing the gain over the past 12 months to 14.7 percent.
Jewelry and silverware sales led a 23.9 percent jump in the miscellaneous category to C$1.13 billion, rebounding from a similar decline the month before.
The Canadian dollar gained 0.2 percent to C$1.0308 per U.S. dollar at 10:00 a.m. in Toronto. Yesterday it touched C$1.0283 per U.S. dollar, the highest since Aug. 12. One dollar buys 97.01 U.S. cents.
Fifteen of 21 industries tracked by Statistics Canada reported increases in July. Excluding price changes, a better indicator of the industry’s contribution to economic growth, factory sales rose 1.1 percent.
The gains came after flooding in June in Alberta, home to the country’s oil sands deposits. Sales in that province rose 2.1 percent in July.
Unfilled orders rose 0.4 percent to C$73.6 billion in July, while new orders dropped 1.7 percent to C$49.8 billion. Inventories rose 0.4 percent to C$69.1 billion, with the ratio of factory stockpiles to sales falling to 1.40 from 1.41.
Even with the gains, factory sales fell 0.1 percent from a year earlier and remain below the peak of C$50.5 billion at the end of 2011. That leaves manufacturing as the biggest sector of Canada’s economy that hasn’t returned to levels recorded before the last recession in 2008.
“Today’s report perhaps provides early signs that the winds might be changing for the struggling industry,” Francis Fong, economist at Toronto-Dominion Bank, wrote in note to clients.