If you’re looking for a sign that Canada’s economy is improving, look no further than your local car dealer.

According to the Canadian Automobile Dealers Association, new car sales in Canada have jumped in recent months, so much so that Canadian car buyers are on a record-setting pace. "Last month was the best July we've ever seen in Canada for new car sales. So we're now three percent over last year and well on pace to break the record for new car sales in Canada," says the association’s Chief Economist Michael Hatch.

Three percent might not sound like much, until you realize that last year Canada’s auto industry was worth about $85 billion. This year dealers are on pace to sell about 1.7 million new cars.

In Ottawa, local car dealers are enjoying the trend. Grant Schubert at Donnelly Ford says “It’s been a pretty busy summer. A lot of people are coming by, a lot of people wanting to buy vehicles rather than having to because their old one isn’t working anymore. The desire is there.”  

The story is the same across town at Ogilvie Mercedes-Benz, where William Verhey observes. “If we look at the Month of July and compare it to July of last year we had about a 30% increase.”

A number of factors are contributing to the surge in sales. People who have put off buying for a few years are now taking advantage of sales incentives, from employee pricing to 0% financing. Many are financing over  six, seven, or even up to eight years. And today’s cars have become more fuel efficient and technologically advanced, giving consumers another incentive to buy every time gas prices go up.

Most importantly, more Canadians are working again. Michael Hatch says the spike in car sales closely follows a recent spike in job creation. “Things have been picking up,” he say. “People are more optimistic. People are more willing to spend some money.”