UPDATE 2-Canadian factory sales rise in June on oil, coal

(Adds economist comments, detail from the report)

OTTAWA, Aug 16 (Reuters) - Canadian factory sales grew by 1.1 percent in June from May, thanks largely to a rebound in petroleum and coal products after temporary shutdowns in the spring, Statistics Canada said on Thursday.

Analysts in a Reuters poll had forecast a milder 0.9 percent increase. Statscan revised May’s increase to a 1.5 percent gain from an initial rise of 1.4 percent.

Sales rose in 15 out of 21 industries, while declines were seen in chemicals and food products. Excluding vehicles and parts, manufacturing sales were up 0.9 percent.

“With the overall increase in volumes coming in at 0.7 percent, and inventories up slightly, the manufacturing sector should still be a modest positive contributor to monthly GDP,” CIBC Capital Markets economist Andrew Grantham wrote in a note to clients.

Sales of petroleum and coal products surged 15.9 percent in June, boosting capacity utilization rates for the industry, which rose to 89.8 percent in June from 69.8 percent in May, Statscan said.

Sales of chemical products, chiefly pesticides, fertilizers and other agricultural chemicals, were down 4.5 percent in June after two straight monthly increases.

“This industry often posts significant growth in May and then declines in June following spring planting in the agricultural sector. This year, the decline in June was larger than previous years,” Statscan noted.

Sales of food products fell 1.7 percent after four straight monthly gains, while primary metal sales edged down 0.3 percent after four straight increases.

Reporting by Andrea Hopkins; Editing by Bernadette Baum