- Benjamin Reitzes, senior economist at BMO Capital Markets
Canada's manufacturing sales rose more than expected in December, bolstering monthly GDP expectations. Sales rose 1.2% to $51.6 billion during the reported month, Statistics Canada reported, compared with market's predictions for a 0.8% increase. Volumes also rose 1.3%, reflecting a higher output. November's sales figure was also revised to show a 1.2% gain. The two positive months at the end of the year might translate into momentum in 2016. However, falling prices for the petroleum and coal sector dragged down sales in manufacturing, one of the largest sectors in the economy, by 1.5% last year to $609.5 billion compared with $619.1 billion in 2014.
Canada's economy slid into recession in the first half of last year as GDP contracted for the first two quarters of 2015, hit hard by the drop in oil prices. Growth rebounded in the third quarter, but economists have raised concerns about the final quarter of the year. In January, the Bank of Canada downwardly revised 2015 fourth quarter growth to 0% from 1.5% on an annual basis. The central bank also lowered its projections of growth in the first quarter of 2016 to 1%, while in the three months through June the Canadian economy is predicted to grow 2.2%. Overall, Canada's economic output is expected to increase 1.5% in 2016 and 2.5% in 2017.
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