OTTAWA (CP) - The struggling Canadian manufacturing sector showed surprising strength in March in the face of the U.S. slowdown and high Canadian dollar, a strong indicator that the Canadian economy is picking up steam.
Factories shipped out $50 billion more in manufactured goods than the previous month, a 2.8 per cent jump that was almost three times above market expectations. Sales of new autos rebounded slightly as well after a two-month slump. Statistics Canada said preliminary figures indicate vehicle sales climbed seven per cent in April.
The strong numbers, combined with other recent economic indicators, served to lessen the impact of a Canada Mortgage and Housing Corp. outlook predicting the house building boom was over, with fewer homes being built both this year and next.
''We are seeing pretty strong numbers generally,'' said Dawn Desjardins, senior economist with RBC Financial. ''These are quite a bit stronger than the Bank of Canada was expecting.''
And she pointed out that the housing numbers only appear weaker in comparison to a banner year in 2006.
Desjardins predicted the economy is set to return to its potential growth rates after three sub-par quarters and would come in at or above 2.8 per cent for the quarter, 0.3 percentage points higher than the Bank of Canada outlook.
The market responded immediately to the news and sent the Canadian dollar soaring to above 91 cents U.S.