By Leah Schnurr
OTTAWA, March 16 (Reuters) - 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. CAD/
"Canadian exports are starting to show signs of life, and
factories are responding in kind," CIBC economist Nick Exarhos
wrote in a note.
Renewed strength in the export sector is key to the Bank of
Canada's economic outlook.
The expiration of currency hedges and contracts priced in
the Canadian dollar are expected to give exporters a competitive
edge and provide additional power to a rebound in the
manufacturing sector.
Sales of vehicles surged 9.6 percent in January, the biggest
increase since March 2015. The weaker Canadian dollar and a
shift toward production of higher-end, more expensive models
boosted the sector.
Food sales rose 4.6 percent, with volumes the highest in
more than 10 years. The report noted that the food industry is
usually one of the more stable in the manufacturing sector.
Separate data showed foreign investors resumed buying
Canadian securities in January with a big push into corporate
and government debt, while Canadians sold off their positions in
foreign equities during the volatile month for markets.
Foreigners bought C$13.51 billion in Canadian investments
after selling a small amount at the end of 2015.
Canadians sold a record C$13.82 billion in foreign
securities. The reduction in U.S. equities investments was the
largest in a year.
($1 = $1.3358 Canadian)
(Editing by Meredith Mazzilli)