(Adds economist reaction, paragraphs 5-6
OTTAWA, March 18 (Reuters) - A strong rebound by the auto industry helped boost shipments by Canadian manufacturers by an unexpectedly high 3.7 percent in January from the month before.
"Manufacturers began the year with a strong performance," Statistics Canada said on Tuesday in releasing the data.
Bank of Canada Governor David Dodge had repeated earlier on Tuesday that Canada's monetary policy remained stimulative, and the exceptional strength of the manufacturing data was bound to reinforce that stance.
Excluding the overall 14.0 percent increase in motor vehicles and parts, shipments still rose by 1.6 percent. Motor vehicle shipments rose by 15.4 percent, ending five months of declines. Several auto firms returned to higher output in January after extended shutdowns at some plants in November and December.
Overall shipments had fallen by 1.0 percent (revised from 0.9 percent) in December and 1.4 percent (1.5 percent) in November. January's levels were the highest in two years.
"The surge in Canadian factory activity at the start of 2003 echoes a strong showing by U.S. manufacturing in January. However, with auto sales retreating and (second quarter) assembly schedules chopped, the strength is unlikely to continue," BMO Nesbitt Burns chief economist Sherry Cooper said.
"Still, this result will bolster the (first quarter) growth picture, and reinforce the Bank of Canada's view that policy needs further tightening."
New orders rose 2.9 percent in January, or 0.6 percent excluding autos, while unfilled orders fell by 3.3 percent (the same amount excluding autos) because of a decline in the aerospace industry.
A 0.2 percent decline in inventories, combined with the higher shipments, prompted a sharp drop in the ratio of inventories to shipments to 1.41 from 1.47 in December. A lower number usually indicates manufacturing strength.
A Reuters survey of analysts had predicted shipments would rise 0.3 percent, unfilled orders would fall by 0.6 percent, new orders would dip 0.1 percent and the inventory/shipment ratio would stay at 1.47.
All figures are seasonally adjusted.