Canadian manufacturing sales rose at a surprisingly strong clip at the start of the year, raising expectations that the economy will see stronger growth in the first quarter than the Bank of Canada has forecast. Factory sales rose 2.3 percent in January, Statistics Canada said on Wednesday, topping analysts' forecasts for a gain of 0.5 percent and pushing sales up to a record C$53.13 billion ($39.8 billion). December was revised up to a 1.4 percent gain.
While some of January's increase was due to the depreciation of the Canadian dollar, which can increase prices, volumes were robust with a 2.4 percent increase. Volume levels were at their highest since before the 2008-2009 recession.
Economists said the figures suggest the economy could exceed the Bank of Canada's 1 percent growth forecast in the first quarter. The central bank cut interest rates twice in 2015 to help an economy stung by a brief recession, but has held rates where they are so far this year.
The Canadian dollar, which hit a 12-year low in January, pared its losses against the greenback following the factory data but still remained weaker.
"Canadian exports are starting to show signs of life, and factories are responding in kind," CIBC economist Nick Exarhos wrote in a note.