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Record factory sales are stirring hope that Canada’s economic growth could outpace Bank of Canada Governor Stephen Poloz’s expectations.
Statistics Canada said Tuesday that manufacturing sales rose 2.3 per cent in January to $53.1-billion, an all-time high.
“We remain optimistic that much of these gains will be sustained in coming months as the past declines in the loonie and robust U.S. domestic demand continues to support Canadian shipments,” said TD economist Warren Kirkland.
The gains were broad-based as sales topped $53-billion. It was the third straight month of gains, and it's stirring hope that economic growth will outperform the Bank of Canada;s expectations in the first quarter.
The result topped the 0.5 per cent gain that had been expected by economists, according to Thomson Reuters.
The increase came due to higher sales of motor vehicles, food and motor vehicle parts.
Sales of petroleum and coal products fell 5.9 per cent.
Sales rose in 16 of 21 industries, representing more than 80 per cent of the manufacturing sector.
“Canadian exports are starting to show signs of life, and factories are responding in kind,” wrote CIBC economist Nick Exarhos in a report to clients. “The real gain in shipments also augurs for a solid month in January GDP … [and] it suggests that growth will easily surpass the BoC’s Q1 growth target of 1 per cent.”
Eight provinces recorded higher sales in January, led by Ontario and Quebec. And TD’s Kirkland believes the best is yet to come for those provinces.
“We expect most of the upside remains to be seen across Ontario, Quebec and B.C.,” he wrote in a report to clients.
The only provinces to report lower sales were Alberta and Nova Scotia.