Canada Factory Sales Plunge, Economy Weakens

This decline, which was slightly softer than the initial estimate but still significant, marks the third drop in four months and follows a downward revision to December's growth. The primary driver of this weakness was an extended winter shutdown at several auto plants for retooling, leading to a sharp 38.9% drop in motor vehicle sales and a 7.7% decrease in vehicle parts sales.

Excluding the auto industry, manufacturing shipments were down a more modest 0.5% monthly. The broader economic impact is evident, with wholesale sales volume down 1.5% and goods exports sinking 4.7%, casting doubt on Statistics Canada's earlier estimate of flat GDP for January.

This data adds to signs of a struggling economy entering the year, ahead of the Bank of Canada's next monetary policy meeting, where the central bank had previously projected 1.8% annualized growth for Q1 and 1.1% for 2026.