Jump in Canada factory sales seen boosting growth after dip
By David Ljunggren
OTTAWA (Reuters) - Canadian manufacturing sales jumped a much greater-than-expected 1.7 percent in July from June, a sign the economy is recovering after disruptions caused by floods in Alberta and a work stoppage in Quebec.
Analysts had predicted sales would rise 0.5 percent from June. The month-on-month increase was the largest since the 3.5 percent leap in February, Statistics Canada said on Tuesday.
Of 21 industries, 15 posted higher sales in July. Constant dollar sales grew 1.1 percent, indicating that most of the overall July increase was volume-based.
The Canadian economy, heavily dependent on the United States, has largely struggled to impress this year and June manufacturing sales were hit by both the floods and work stoppage. Analysts said the healthy factory sales figures were a sign growth could be picking up.
"The rebound in the volume of manufacturing sales in July is encouraging and suggests ... weakness in June was nonetheless temporary," said Nathan Janzen of RBC Economics Research.
Statscan revised its figures for June, saying factory sales had slid only 0.1 percent on the month. Initially it said they had dropped 0.5 percent.
Mazen Issa, a strategist at TD Securities, said whether the healthier trend continued depended largely on the durability of the U.S. recovery.
"Though there are several immediate obstacles that could derail this (for instance, the debt ceiling debate), we ultimately look for a sustainable rebound, which should see the Canadian economy gradually accelerate through next year," he said in a note to clients. Continued...