Economic data keeps trumping low expectations and it’s solidifying hopes that an interest rate hike will happen tomorrow.

The latest bit is the news out that new motor vehicle sales in Canada increased by 2.2% in May. That’s more than double the consensus estimate of a 1% gain. RBC Financial Group notes that for the second consecutive month, new truck sales led activity with a 3.7% gain, while car sales rose 1%. The western provinces and Quebec accounted for the largest gains in new vehicles sold, but sales dropped in Atlantic Canada.

“Although motor vehicle sales posted back-to-back gains in both April and May, sales seem to have leveled off since November 2001 when generous incentive programs first began to induce frenetic spending activity. The slower pace of vehicle sales is consistent with a marginal slowdown in durable spending expected for the second quarter and generally in line with an expected second-quarter GDP growth rate of 5%,” says RBC.

RBC also suggests that today’s motor vehicle sales report is yet another supportive piece of information calling for a reduction in the amount of monetary stimulus. Like most of the Street, RBC expects the Bank of Canada to increase the overnight rate by 25 basis points and highlight in its statement the need for future rate hikes alongside increasing capacity pressures. “The Bank, however, could also be expected to acknowledge the weakness in equity markets and the associated impact on business sentiment.”

In the U.S., it was reported that business inventories rose 0.2% in May, ahead of an expected decline of 0.1%. This was the first increase for economy-wide inventories, following a 16-month run in U.S. inventory shedding, RBC points out. This is generally seen as a good sign for the U.S. recovery. But RBC cautions against U.S. rate hikes any time soon, noting, “Although today’s upside inventory correction as well as upcoming releases covering activity in the good’s sector remains a supportive element for U.S. growth, a weakening consumer sector as well as weakness in the equity markets will pre-empt any call for interest rate hikes. Expect the Canada-U.S. overnight spread to stretch to 175 basis points towards year-end from a current 75 basis points.”