Manufacturing sales rose a better-than-expected 1.3% in January, Statistics Canada reported today.

The sector struggled to claw its way back from dismal sales in December, when sales slumped to a three-year low of -3.7% growth. Today’s data beat economists’ estimates of a 1% rise.

Manufacturing sales for January were $49.3 billion, pushed up by automobile sales, which jumped 4.5%, to $3.9 billion to regain some of the troubled sector’s 25.6% decline in December.

However, even with this gain, manufacturing sales remained at their lowest level since March of 2005, driven down mainly by the struggling auto sector.

“Much of the weakness continued to come from the motor vehicle and parts industry, which has toiled against a number of production impediments in recent months,” StatsCan said.

“Despite the strong performance in January, the Canadian manufacturing sector continues to be pummeled by the slowing U.S. economy, higher energy prices and the adverse impact of the strong Canadian dollar,” wrote Millan Mulraine, economics strategist at TD Securities. “Following the less than stellar performance last year, we expect the Canadian manufacturing sector to continue to struggle in the face of these ominous headwinds.”

The sales increase was fairly broad-based, with 16 of 21 industries posting increases for the month.

Inventories rose 1.4%, only the second gain in six months, to $66 billion in January as petroleum producers replenished stocks.
The downward trend for inventories has levelled off in recent months. Despite a rise in sales, growing inventories left the inventory to sales ratio flat at 1.34.

The level of new orders made up some ground in January, rising 2.9% to $51.4 billion, following December’s massive -5.9% decline. But new orders have still weakened substantially over the last year, as January’s level remained 8.6% the same period the previous year.