A relatively quiet data week in Canada should show a bounce-back in the flash estimate of manufacturing sales after a soft January. Higher oil prices boosted the nominal value of petroleum sales in January and likely will again in February with crude oil prices up another 10% in February. But sale volumes also likely bounced back after a 1.8% January drop. Manufacturing hours worked surged back (+3.1%) in February after a 3.3% drop in the prior month when rapid Omicron spread (and another round of auto supply chain disruptions) kept workers closer to home.
Data on food services sales also likely looked weak in January with restaurant dining rooms closed in Ontario and Quebec, but our own card spending tracking shows that services spending also rebounded sharply in February as virus spread and restrictions eased. The shrinking economic impact of the pandemic, and broadening inflation pressures are pushing the Bank of Canada to follow through on planned rate hikes despite increased geopolitical risks from the Russian invasion of Ukraine.
Week ahead data watch:
Canadian manufacturing sales will likely be boosted by higher petroleum prices with crude oil prices jumping higher again in February (a trend that has continued in March with the Russian invasion of Ukraine.) But we expect sale volumes bounced back after a 1.8% drop in January on a 3.1% rebound in February hours worked after a 3.3% drop in the prior month.
