Canada Wholesale Revenues Up Slightly in June

Source: Statistics Canada

Wholesale sales in Canada grew only slightly in June (+0.2%), as increased sales of other products" were largely offset by a decrease in the automotive sector. Excluding the automotive sector, sales grew  ; 0.6%.
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Wholesale sales for the second quarter were down for the first time in nearly four years. This contraction was largely attributable to the automotive sector.


In June, increases were observed in the "other products" sector (+2.8%), the machinery and electronic equipment sector (+1.0%) and the farm products sector (+6.0%). These advances, however, were partially offset by contractions in the automotive sector (-1.6%) and the personal and household goods sector (-0.8%).

In constant prices, wholesale sales rose  ; 0.1% in June.

"Other Products" Continue Rise
For a second consecutive month, the sales of "other products" (primarily agricultural products, chemicals, paper products and recycled materials) rose, up  ; 2.8% in June to  ; $5.4  ; billion.

An increase in global demand for products such as fertilizers and fertilizer materials has contributed in part to the recent sales growth in this sector. According to Export Development Canada, substantial increases in crop acreages in the world (for food, biofuels, etc.) are boosting the demand for Canadian fertilizers. The increased demand for fertilizers has also pushed up their prices.
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Machinery & Electronic Equipment Up
After rising  ; 2.3% in May, sales of machinery and electronic equipment grew  ; 1.0% in June. Two groups in this sector were behind June's increase.


Machinery and equipment sales posted a second consecutive increase in June (+2.5%). Despite these recent advances, this group's sales were still below the peak reached in March  ; 2007. This weakness was partly due to a sharp decrease in the activities of the oil and gas exploration industry, which caused it to cut back its purchases of machinery and equipment. The low price of natural gas led exploration companies to scale back their activities considerably, leading to a drop in the number of wells operated.

Wholesale sales of computers and other electronic equipment rose 1.9% in June. This was the seventh increase in nine months for this trade group, which, in  ; 2006, had posted its biggest annual increase since  ; 1999. The strong showing of the cell phone market has in part contributed to the robust sales of this group in recent years. According to the Telecommunications Statistics Survey, at the end of  ; 2006  ; the number of wireless subscribers was up  ; 8.4% compared with  ; 2005  ; to just over  ; 18  ; million.

Wholesale sales of office and professional equipment registered a second decline in three months (-3.1%). The drop in sales only partially offset the advance recorded in May (+5.5%).
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Automotive Sector Falls
Wholesale sales in the automotive sector fell  ; 1.6% to  ; $7.8  ; billion in June, a second decrease in three months. This decline followed the moderate increase observed in May (+0.2%) and the steep drop in sales in April (-8.9%).
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Wholesale sales of motor vehicles fell  ; 1.9% in June, a second drop in three months. These declines were attributable in part to decreased demand in North America. Exports of both trucks and cars declined for a third consecutive month. Wholesalers also moderated their purchases, as car imports also declined for a third consecutive month.

Wholesale sales of motor vehicle parts also declined in June (-0.5%). This drop more than offset the  ; 0.2% increase registered in the previous month. Wholesalers in this industry, who mainly sell to retailers and dealers, have seen their sales remain generally stable since March  ; 2004.

By

Province
The strong performance of Alberta and British Columbia helped to offset a rather lacklustre month of June for wholesalers in Central Canada. At the national level, five provinces as well as the three territories saw a drop in total sales.


In Alberta, wholesale sales posted their first increase in three months, owing to the strong performance of wholesalers of machinery and equipment, and "other products."
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Wholesalers in British Columbia registered their third increase in four months, mainly attributable to a number of sectors, including machinery and equipment, and food, beverages and tobacco products.

Quebec and Ontario both saw their sales decline 1.2% in June. The decrease of $97  ; million in Quebec's sales partially offset the increase of  ; $170  ; million (+2.1%) registered in May. This decrease was attributable to the personal and household goods sector, which accounts for approximately  ; 20% of the province's total sales, as well as to the building materials sector.
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The drop in sales in the automotive sector especially affected Ontario, where much of this industry is concentrated. Even so, Ontario wholesalers have generally recorded increases in their sales since January  ; 2005.

Inventories Up Slightly
Wholesalers' inventories rose  ; 0.1% to  ; $54.2  ; billion in June, the seventh increase in eight months.


June's slight increase in sales contributed to a decrease in the inventory-to-sales ratio, which edged down from  ; 1.26  ; in May to  ; 1.25  ; in June. The instability of sales in recent months has contributed to some fluctuation in the ratio. The inventory-to-sales ratio is a key measure of the time (in months) that would be required to exhaust inventories at the current rate of sales.


Quarterly Sales Decline
Despite the gains of the past two months, sales in the second quarter posted a decline of  ; 0.6%. This reduction, which follows a strong performance in the first quarter (+3.2%), was the first quarterly contraction in wholesale sales since the third quarter of  ; 2003. The reversal in quarterly sales was largely attributable to the automotive sector. In the second quarter, sales of automotive wholesalers declined  ; 4.8%, after growing  ; 7.1% in the previous quarter.


For some sectors, however, quarterly sales were robust. In particular, the food, beverages and tobacco products sector posted a  ; 1.7% gain in the second quarter. Sales in this sector were boosted by higher prices for some food items as well as strong demand by food and beverage stores.


Quarterly sales of personal and household goods rose  ; 1.3%. A rebound in the sales of the household products group in the second quarter (+3.4%) was the main factor in the quarterly increase for the sector.

At the provincial level, Ontario posted a  ; 1.1% decline, having mainly been affected by sluggish sales in the automotive sector. More than  ; 75% of the motor vehicles trade group's sales are concentrated in this province. As well, this sector accounts for more than one-quarter of Ontario's wholesale activities. For its part, Alberta registered a  ; 4.4% drop during the quarter. This was the first contraction in  ; 16  ; quarters. Alberta suffered from weak sales in the automotive, "other products" and machinery and equipment sectors.

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