Canadian wholesale sales for January beat market expectations once again, adding weight to the argument in favour of additional hikes to Canadian interest rates.

Statistics Canada reported Thursday that wholesale sales of goods and services rose a robust 1.8% to $36.7 billion, the eighth consecutive monthly increase.

This has been the longest period of growth since 1998-1999, when sales advanced for twelve months in a row.

Since November 2001, wholesale sales have posted relatively strong growth following a fairly lacklustre performance from the spring of 2000 to October 2001.

“Another day, another unexpectedly strong economic release in Canada,” says RBC. “Such gains come despite the current weakness of the U.S. economy, which is a primary market for Canadian wholesalers. Instead, demand has remained largely supported by the domestic market,” it observes.

“Although the wholesalers report will go largely unnoticed by markets especially as developments in Iraq come to the fore, this report supports the fact that domestic demand remains strong in Canada and remains generally untarnished by the relatively soft U.S. economy and risks in the geopolitical environment,” RBC says. “This suggests that the Bank of Canada will remain on a tightening cycle.”

http://www.statcan.ca/Daily/English/030320/d030320a.htm