"Manufacturing has stagnated in 2013 and not much positive momentum should be expected over the balance of the year as the prospects of a healthy recovery in the U.S. into the fourth quarter look precarious"
-Mazen Issa, an economist with TD Securities
After last week's worse-than-expected factory sales that raised concerns over weak August GDP data, wholesale sales report is raising hopes the economy is still on the path of recovery. On Monday Statistics Canada said sales advanced 0.5% to C$49.8 billion, posting the second straight month of gains, outpacing analysts' predictions for a 0.3% increase. The main contributor to growth came from sales in motor vehicles that inched higher 4.5%, the higher in two year. In volume terms, wholesale also logged an increase of 0.3%, removing the impact of price changes.
Monday's data is a welcoming sign for Canadian policymakers, as retailers usually order more goods from wholesalers only when they expect a pick up consumption. Nonetheless, the pace of growth in the Canadian economy has been disappointing so far, according to Bank of Canada Governor Stephen Poloz. He already acknowledged his upbeat-sounding speeches in causing market confusion over the central banks economic outlook that is needed to be corrected.
On Wednesday, the Bank of Canada will decide whether to make any adjustments to its monetary policy or the economy does not any additional stimulus and it will be able to expand further. However, they are likely to cut second half economic growth, expecting an expansion in a range between 2% and 2.5% over the last six months of this year.
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