Canadian manufacturing shipments rose 0.8% to $42.1 billion in February, driven by the resurgence of the auto industry. This followed January’s 3.2% surge.

The February gain is lower than expected, but not weak enough to worry economists.

“Yesterday, the Bank of Canada declared that the economy was in the midst of a “robust recovery”, and today we saw some further evidence,” says BMO Nesbitt Burns. “Manufacturing shipments and orders posted solid gains in February following a huge increase in the prior month.”

Autos drove the gain in shipments, with shipments actually down 0.4% excluding autos. Motor vehicle shipments rose 9.1% in the month. “More impressively, orders chalked up another hefty advance, with strength across most sectors,” says BMO Nesbitt. “Even excluding autos, orders have bolted ahead at a 14.4% annual pace in the past three months, pointing to solid gains ahead for production. This ramping up may partly explain the incredible strength in factory payrolls since the start of the year — almost 100,000 new jobs (or a mammoth 4.5% increase).”

It notes that manufacturers continue to cut inventories too. “Over the past year, a towering level of inventories has often been cited as a risk to the outlook for Canadian factories. However, inventories fell for the ninth month in a row in February, with the 0.1% decline cutting stocks 5.0% from year-ago levels. At the same time, the inventory-shipments ratio is in full retreat, dropping to 1.47 in the month from 1.49 in January and a recent peak of 1.56. The I/S ratio is now down from year-ago levels for the first time in almost two years,” says BMO.