UPDATE 2-Surprise jump in Canada factory sales could lift growth

Tue Dec 17, 2013 11:38am EST
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* Sales jump 1.0 pct vs estimate of 0.3 pct decline

* Sales hit highest level since May 2012

By David Ljunggren

OTTAWA, Dec 17 (Reuters) - Strong food shipments pushed Canadian factory sales in October to their highest level since May 2012, an unexpected development that could help underpin fourth-quarter economic growth.

Statistics Canada said on Tuesday that manufacturing sales in October rose by 1.0 percent from September to hit C$50.09 billion ($47.25 billion). Analysts had forecast a 0.3 percent decline.

Overall factory shipments rose by 2.6 percent from October 2012, the biggest year-on-year jump since a 3.6 percent increase recorded in July 2012.

Since the 2008-09 recession Canadian companies have struggled to cope with weak markets and a strong Canadian dollar. Many analysts are looking for signs the manufacturing sector might be starting to recover.

"The print points to gross domestic product upside in the fourth quarter," said Derek Holt of Scotiabank Economics.

"November's strong industrial output in the U.S., which was focused on autos, has us expecting autos strength in Canada in November too. The bottom line is that manufacturing is looking up for the fourth quarter," he said in a note to clients.   Continued...