Canadian Wholesale Sales Rise for Fourth Month

Canadian wholesales data released today showed a consecutive four months rise in the wholesales as it grew by 0.3% in the month of July on the trail of a 0.7% gain in the previous month. This rise gave it an annual gain of 3.3% and was mostly in line with the consensus market forecasts. In terms of volume, sales were unaffected on the month as they posted an increase of 2.5% since the start of the year, this data will the raise hopes for more stable growth in sales. Sales were reported to have grown in 5 out of 7 sub-sectors, which represents 72% of total sales.

The increase came in slightly above expectations of a 0.2% rise, and marked the fourth consecutive gain. In volume terms, wholesale sales were unchanged in July.

Sales however fell in energy-producing Alberta, which was hit by a major wildfire in May, for the third time in four months, dropping by 2.5 per cent. Statscan carried out additional research in May and June to judge the impact of the blaze but did not do so in July.

Sales in Ontario, the most populous province, rose 0.6 per cent to hit a record high, while in Quebec they increased by 1.1 per cent. The two provinces together account for around 61 per cent of the Canadian population.

The annual growth is now at 8.7% as the monthly gain in sales for motor vehicles and parts reached a firm 2.0%, with the exception of the 8.7%, there was a 0.1% decline to result in a 2.1% annual increase. Food and Drink also posted a strong gain of 1.2% to result in an annual gain of 4.9%. In other data, machinery sales rose for the first time since January, as sales of household and personal goods fell by 2.0% on the month, it however recorded a gain of 4.8%. Building materials recorded a decline on both a monthly and annual basis.

Inventories were unchanged for July to give a 0.2% annual decline with the inventory-to-sales ratio also unchanged at 1.27.

Even as wholesale data often get less attention than other economic indicators, wholesalers account for the biggest portion of the country’s services sector, which in turn makes up around two-thirds of overall economic output. Wholesalers generally act as intermediaries in distributing merchandise and tend to sell goods in large amounts to retailers, businesses and institutional clients.

July’s wholesale data come one day after Bank of Canada Governor Stephen Poloz warned in a speech in Quebec City that Canadians should prepare for a prolonged period of slow growth and low interest rates. “Households may need to save more for retirement and businesses may need to adjust to lower rates of return on their investments”, Mr. Poloz said.