In Canada manufacturing sales edged up by a weaker than expected 0.1% in February from January as weakness in the energy and auto sectors partially offset gains across a dozen industries, Statistics Canada said on Friday. Statscan also revised down its January sales growth figure to 1.8% from the 2.4% initially published.
Following the report the Canadian Dollar fell back to close down 1.06% against its American counterpart at CAD 1.01271.
The disappointing numbers suggest the economy grew at a slower pace in February than in the preceding five months. Still, analysts expect first-quarter growth to come in just as strong as the fourth quarter, at about 5% annualized. That will keep pressure on the Bank of Canada to raise interest rates either in June or July.
"We expect that, with evidence mounting that the economic recovery in Canada is on increasingly solid footing, the Bank of Canada will look to begin tightening monetary policy," Nathan Janzen, economist at Royal Bank of Canada, wrote in a note to clients.
"However, economic slack built up during the recent recession is expected to keep inflation subdued in the near term, allowing the pace of tightening to be undertaken at a gradual rate," he said.
The majority of primary dealers in Canada expect the first rate rise in July, but forex trading markets have also priced in a hike as early as June 1st.
February sales were strong in plastic and rubber products as well as in chemical products, partly the result of pharmaceutical and medical aid to Haiti following the recent earthquake. Much of the weakness came from a 3.9% drop in sales by the petroleum and coal products industry due to lower oil prices and slowdowns caused by fires at two refineries. Transportation equipment sales fell 1.8%, the second straight monthly decline as a result of temporary auto factory shutdowns and lower parts and aerospace sales.
Following the report the Canadian Dollar fell back to close down 1.06% against its American counterpart at CAD 1.01271.
The disappointing numbers suggest the economy grew at a slower pace in February than in the preceding five months. Still, analysts expect first-quarter growth to come in just as strong as the fourth quarter, at about 5% annualized. That will keep pressure on the Bank of Canada to raise interest rates either in June or July.
"We expect that, with evidence mounting that the economic recovery in Canada is on increasingly solid footing, the Bank of Canada will look to begin tightening monetary policy," Nathan Janzen, economist at Royal Bank of Canada, wrote in a note to clients.
"However, economic slack built up during the recent recession is expected to keep inflation subdued in the near term, allowing the pace of tightening to be undertaken at a gradual rate," he said.
The majority of primary dealers in Canada expect the first rate rise in July, but forex trading markets have also priced in a hike as early as June 1st.
February sales were strong in plastic and rubber products as well as in chemical products, partly the result of pharmaceutical and medical aid to Haiti following the recent earthquake. Much of the weakness came from a 3.9% drop in sales by the petroleum and coal products industry due to lower oil prices and slowdowns caused by fires at two refineries. Transportation equipment sales fell 1.8%, the second straight monthly decline as a result of temporary auto factory shutdowns and lower parts and aerospace sales.