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Canadian factory sales climb 0.6 per cent in January

Workers at Silfab, manufacture solar panels at a facility in Mississauga, Ont. Aug. 4, 2011. Canadian factory sales rose 0.6 percent in January from December as non-durabale goods sales increased. (Kevin Van Paassen/The Globe and Mail)

Canadian manufacturing sales unexpectedly rose in January for the third month in a row, driven by a gain in sales of non-durable goods, including petroleum and coal products, data from Statistics Canada showed on Friday.

The 0.6 per cent increase in manufacturing sales topped economists’ expectations for a decline of 0.2 per cent, while volumes rose 0.7 per cent. Sales were up in 14 of 21 industries, accounting for 75.4 per cent of the manufacturing sector.

The figures could bolster expectations for the strength of the economy at the start of the year following a positive hand-off from fourth-quarter growth.

“Importantly for GDP, volumes increased by 0.7 per cent, and now appear to be on the cusp of breaking out of the sideways range they’ve been in for more than two years,” Nick Exarhos, economist at CIBC Capital Markets, said in a research note.

“All told, a solid first indicator for January GDP, and with a strong hand-off from the fourth quarter of last year, (the first quarter) is tracking a greater than 2 per cent growth pace,” Exarhos added.

The petroleum and coal sector jumped 7.0 per cent, lifted by both higher prices and sales volumes. Stripping out the effect of price changes, volumes for the sector were up 2.1 per cent.

Chemical sales rose 2.5 per cent, the third increase in four months, on higher demand from farmers for pesticides and other agricultural chemicals, which typically occurs at the start of the season. Overall, sales in non-durable goods sectors rose 2.3 per cent, while durable goods sales slipped 0.8 per cent.

New orders jumped 4.6 per cent, the biggest increase since last April, on an increase in orders from aerospace products and parts and vehicles.