* Sales rise 1.4 pct vs estimate of 1.0 pct gain
* Record-high jumps in new orders, unfilled orders
* Transportation equipment, energy main contributors
* February GDP growth seen slowing from January
(Adds analysts' comments, background)
By Louise Egan
OTTAWA, April 15 Canadian manufacturing sales in
February jumped to the highest level since their pre-recession
peak in July 2008, but volumes were more modest and pointed to
slower economic growth than in January.
Sales gained 1.4 percent versus expectations for a 1.0
percent increase, helped by higher auto industry sales and by
higher energy prices, Statistics Canada data showed on Tuesday.
Statscan revised down January's sales increase to 0.8 percent
from 1.5 percent, however.
The overall report was upbeat for a sector that is still
struggling five years after the recession, with demand from the
U.S. market staying tepid.
The report's details offered a mixed picture. There was an
unprecedented increase in unfilled orders and in new orders, but
sales rose just 0.8 percent in volume terms.
"While the improvement in manufacturing sales is an
encouraging development, we would downplay the strength of this
report given that some of it is likely embellished due to a
resumption in activity following the weather-induced slowdown in
U.S. production," said Mazen Issa, senior Canada strategist at
TD sees industry-level gross domestic product growing 0.2
percent in February, down from 0.5 percent in January, and sees
1.6 percent annualized economic growth in the first quarter
versus 2.9 percent in the fourth quarter. Other forecasters see
a similar trend.
The Bank of Canada may revise down its growth forecasts in
its quarterly report on Wednesday. Analysts polled by Reuters
unanimously expect the bank to also hold its benchmark interest
rate unchanged at 1.0 percent.
Transportation equipment sales rose 4.3 percent in February.
The biggest gain was in motor vehicle parts, but the motor
vehicle assembly and other transportation equipment sub-sectors
also saw increases.
Sales in the petroleum and coal-product industry increased
2.9 percent due mainly to a 2.5 percent rise in prices.
New orders jumped 18.8 percent and unfilled orders rose 16.5
percent in February, the biggest monthly increases since the
data series began in 1992.
Both rose on a resurgence in the transportation equipment
industry, particularly the "other transportation equipment
sub-industry", which includes armored vehicles, military tanks,
all-terrain vehicles and motorcycles, and the aerospace
Offsetting that bright outlook was the fact that orders for
big-ticket transportation equipment such as aerospace may not be
reflected in shipments in the near term as the equipment takes
longer to produce.
"A caveat is that since the transportation sector appeared
to play a heavy role, some of this - like autos - will show up
faster than the rest - like aerospace," said Derek Holt and Dov
Zigler, economists at Scotiabank Economics.
Manufacturers' inventories grew by 1.1 percent in February.
As a result the inventory-to-sales ratio dropped to 1.41 from
1.42 in January.
(With additional reporting by Alex Paterson; editing by Peter