Vehicle sales in Canada rose to their highest level in nearly three years this summer on the back of improving employment levels and incentives from automakers, according to a report by Scotia Economics.

Car and light truck sales rose to an annualised 1.62m vehicles in June and July, from 1.48m in May. Total sales in Canada were 1.46m last year.

Scotia said it expects Canadian auto sales of 1.57m this year, up from an earlier estimate of 1.53m - rising to 1.59m in 2011. Senior economist Carlos Gomes said sales in Canada were helped by stronger than expected job creation in recent months, as well as higher incentives by most automakers.

He added he expected the pace of Canadian sales to ease going forward as manufacturers scale back on incentives, as they have already done in the US.