Published: Sun, March 26, 2017
Economy | By Melissa Porter

Economy shows signs of momentum with stronger retail sales

Wholesale trade increased by 3.3 percent, the largest monthly percentage gain since November 2009.

Wholesale inventories fell 0.3% in January, the first decline in six months, with a sharp decline in motor vehicle inventories.

The Canadian dollar strengthened on Tuesday to a three-week high against its USA counterpart, boosted by higher oil prices and stronger-than-expected domestic retail sales. The 2.2 per cent increase topped economists' expectations for a gain of 1.1 per cent, while volumes were also robust, up 1.3 per cent.

"The auto sector drove wholesaling insane in January, enough for at least some eyebrows to be raised at what is typically seen as a second-tier Canadian economic indicator", CIBC chief economist Avery Shenfeld wrote in a brief report. The better-than-expected print puts Tuesday's retail sales data in the company of other surprisingly resilient numbers.

BMO had already raised their forecast for Canada's first-quarter growth to 2.7 per cent after robust wholesale trade data on Monday.

There was a notably strong increase in motor vehicle and parts sales of 17.1% on the month to give an 8.1% annual increase.

"There were higher imports and exports of motor vehicles and parts in January, and motor vehicle manufacturing sales increased for a second consecutive month", Statistics Canada said.

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