By Paul Vieira

OTTAWA -- Wholesale sales in Canada surged in January, posting their biggest month-over-month gain in over seven years, on record sales in the motor-vehicle sector.

Wholesale sales increased 3.3% on a seasonally-adjusted basis in January to 59.09 billion Canadian dollars ($44.30 billion), Statistics Canada said Monday.

Market expectations were for a 0.4% advance, according to economists at Royal Bank of Canada. The last time wholesale sales rose this much in one month was November 2009.

On a 12-month basis, wholesale trade increased 4.7%. In volume terms, January wholesale sales rose 3.4% from the previous month.

The data agency revised December's figures downward, and now estimates wholesale sales rose 0.3% in the month versus the earlier estimate of a 0.7% gain.

Wholesale trade is the largest component of Canada's services sector -- which in turn accounts for two-thirds of the country's economic output. Wholesalers tend to move merchandise in large quantities to institutional, industrial and retail clients.

January's unexpected surge in wholesale trade adds to evidence that the Canadian economy has shifted into higher gear after years of lackluster growth, with activity weighed down by the drop in commodity prices. Last week, Canada's factory sector posted a 0.6% climb in sales in January.

Avery Shenfeld, chief economist at CIBC World Markets, said the combination of decent manufacturing sales and the surprise wholesale trade report adds upside risk to its existing call for 2.1% annualized growth in Canadian gross domestic product in the first quarter.

"Markets might ignore [the wholesale] report, but the string ofdecent data could lean towards an upward creep in bond yields" in the event Tuesday's retail-sales report is positive, Mr. Shenfeld said

Sales in the motor vehicle and parts subsector recorded the largest gain in dollar terms in January, rising 17.1% to C$11.88 billion, the first increase in three months. Excluding this subsector, wholesale sales increased by a more modest 0.3% in January. The data agency said sales of motor vehicles rose 20.8% to a record C$9.27 billion, accounting for most of the advance in the subsector.

Meanwhile, wholesale inventories declined 0.3% to C$73.33 billion, and rose 1.5% on a 12-month basis. A decline in inventories tends to signal consumption exceeded production in the month.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

March 20, 2017 09:46 ET (13:46 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.