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Canadian manufacturing sales rose more than expected in June, boosted by a 16 per cent surge in oil and coal shipments.

Statistics Canada said Thursday manufacturing sales were up 1.1 per cent to $58.1 billion in June, following a 1.5 per cent increase in May.

Economists had expected an increase of 0.9 per cent in June, according to Thomson Reuters Eikon.

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In constant dollars, manufacturing sales were up 0.7 per cent in June.

“Coupled with other better recent economic data — and absent an unexpected shock — the economic backdrop still looks strong enough to warrant further gradual interest rate hikes from the Bank of Canada,” Royal Bank senior economist Nathan Janzen wrote in a brief note to clients.

Last week, Statistics Canada reported the economy generated 54,100 net new jobs in July and saw its unemployment rate fall back to its four-decade low of 5.8 per cent. And earlier this month, data showed surging exports led by higher-priced energy products allowed Canada to shrug off new U.S. steel and aluminum tariffs in June to post the lowest monthly merchandise trade deficit with the world in 17 months.

Many economists expect Canada’s central bank to raise interest rates at least one more time this year.

The Bank of Canada raised its trend-setting interest rate by a quarter of a percentage point to 1.5 per cent earlier this summer. Its key interest rate target is now at its highest point since December 2008.

The increase in factory sales came as the petroleum and coal products industry sales increased 15.9 per cent in June.

Statistics Canada said several major refineries ramped up production levels following temporary shutdowns and spring maintenance that began in April and continued into May.

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Capacity utilization rates for the industry rose from 69.8 per cent in May to 89.8 per cent in June.

The gains in the petroleum and coal group was offset in part by a drop in chemical products which fell 4.5 per cent in June as sales of pesticides, fertilizers and other agricultural chemical products dropped.

Sales of food products fell 1.7 per cent in June following four consecutive monthly gains.

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