Canada's manufacturing sales rebounded 4.1 percent in January, more than Econoday's consensus estimate of 3.9 percent, following a 2.1 percent contraction in December. Sales were up 13.3 percent year-over-year.

Stronger activity was behind January's increase, as volumes were up 3.8 percent over the month, with industrial prices up 0.4 percent.

Another sign of strength in today's report, gains were widespread across 16 of 21 industries, led by petroleum and coal products (10.1 percent), food (3.4 percent) and motor vehicles (13.4 percent), which reached their highest level (C$4.8 billion) since July 2020. Parts were up 2.7 percent. Exports of motor vehicles and parts were up 8.2 percent in January and Canadian production rebounded after the year-end holiday downtime. The auto industry, however, remains challenged by supply chain and shipping capacity issues. Overall, transportation equipment increased 6.1 percent, including an 11.2 percent drop in aerospace. Also on the downside, chemical products fell 2.8 percent and wood industries 4.9 percent.

Leading indicators point to a further advance as new orders recovered 7.1 percent after three consecutive months of declines, and unfilled orders were up 1.0 percent. February jobs data also showed manufacturing employment increased 6,800 from January.

Inventories increased 0.3 percent on the month, bringing the inventory-to-sales ratio down to 1.63 in January from 1.70 in December, its lowest level since June 2022.

The unadjusted capacity utilization rate increased to 78.4 percent from 76.1 percent, led by petroleum and coal and transportation equipment.

Despite today's stronger-than-expected report, Econoday's Consensus Divergence Index at minus 6 indicates a minor underperformance of the Canadian economy.

Manufacturing sales are expected to rise 3.9 percent in January after falling 1.5 percent in December.

Manufacturing sales for twenty-one reporting industries are the Canadian dollar level of factory shipments for manufacturing durable and nondurable goods. Volume figures are also provided. The sales statistics form part of a wide monthly report that encompasses information on new orders, backlogs and inventories and is a key input into forecasts of monthly gross domestic product (GDP).

Manufacturer's shipments represent the monetary level of factory shipments for durable and nondurable goods and are a relevant indicator for an export-oriented economy. The data are used by analysts to evaluate the economic health of manufacturing industries. They are also used as inputs to GDP and needless to say, these data are used by the central bank in its decision-making process.

The monthly survey of manufacturing of which shipments is a part, provides a broad look at manufacturing activity levels. The level of activity in manufacturing can be affected by the level of interest rates which slows or stimulates the demand for goods and production. Shipments are an indication of how busy factories have been as manufacturers work to fill orders. The data not only provide insight to demand for items such as refrigerators and cars, but also business investment such as industrial machinery, electrical machinery and computers. Because a large proportion of shipments are headed south of the border to the U.S. and include a wide variety of durables, shipments are affected by U.S. economic activity as well as the exchange rate. Although the focus in this report is on shipments, it also contains information on inventories and new and unfilled orders.

Results from this survey are used by both the private and public sectors including finance departments of the federal and provincial governments, the Bank of Canada, Industry Canada, the System of National Accounts, the manufacturing community, consultants and research organizations in Canada, the United States and abroad.