(Adds details from report)
OTTAWA, March 17 (Reuters) - Canadian manufacturing sales tumbled more than expected in January, driven down by a drop in sales of petroleum and coal products amid sharply lower prices, Statistics Canada said on Tuesday.
Factory sales fell 1.7 percent to C$51.4 billion ($40.2 billion), the biggest decline since August and surpassing economists' forecasts for a decline of 1.2 percent. December's sales were revised down to 1.6 percent from 1.7 percent.
The volume of sales fell 1 percent. Sales were down in 14 out of 21 industries, accounting for just under half of all manufacturing.
Sales of petroleum and coal products fell 11.9 percent, hitting their lowest level since May 2009 as both prices and volumes fell. The industry has seen sales slump 35 percent in the last seven months as crude prices have dropped.
Machinery sales gave back some of December's strong gains, falling 8.9 percent. Some manufacturers that had large sales in December saw significantly lower sales in January as work began on new projects.
Overall, inventories rose 2.2 percent, while new orders climbed 12.1 percent.
Ontario and Alberta racked up the largest declines by province. Ontario was weaker across a number of industries, including machinery, while oil-rich Alberta was hit by lower sales of petroleum and coal products. Sales fell in eight of the country's 10 provinces. (US$ = $1.28 Canadian) (Reporting by Leah Schnurr Editing by W Simon)