Automotive Decline in August Hurts Canada Wholesale Revenues

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October 27, 2008

Automotive Decline in August Hurts Canada Wholesale Revenues

Source: Statistics Canada

A significant decline in the automotive sector brought to an end a string of five consecutive monthly increases in wholesale sales in August, which dropped 1.5% to $45.7 billion in current dollars. Sales excluding the automotive products sector rose 0.5%.

After removing the impact of price changes, sales in volume terms were 3.3% lower.

Sales of automotive products fell 11.7% in August to $7.0 billion, offsetting the gains over the two previous months. A 13.2% decline in motor vehicle sales was behind most of the drop, while sales of motor vehicle parts and accessories fell 5.8%. Much of the decline in motor vehicle sales can be attributed to slowing demand for larger less fuel-efficient vehicles. According to the latest International Trade report, imports of trucks fell by 29% in August to reach their lowest level in over four years.

The increase outside of the automotive sector was in large part due to higher sales in the food, beverage and tobacco products and "other products" sectors, both of which gained 2.2% in August. The latter consists primarily of sales of agricultural fertilizers and supplies, chemicals, recycled materials and paper products.

By Province

After posting five consecutive monthly increases, Ontario reversed course in August, registering its largest decline (-6.5%) since August 2003. The automotive sector, which had fuelled most of the recent gains, was behind the drop.

Nearly all other provinces reported higher sales in August. The most significant increases came in Western Canada, led by a 5.5% rise in British Columbia. Alberta recorded a seventh increase (+5.1%) in eight months, while in Saskatchewan, sales rose (+5.2%) for the sixth consecutive month. Higher sales of "other products" were behind much of the increase in all three provinces.

Sales in Quebec also continued to move ahead, rising for a fifth consecutive month. The recent increases are partly attributable to higher demand for personal and household goods.

Inventories

Wholesalers reported a 0.6% rise in inventories to $56.9 billion in August, marking a sixth consecutive monthly rise.

Overall, 8 of 15 trade groups reported higher inventory levels. The most significant increases were in the "other products" (+3.6%) and metal products (+3.9%) trade groups. These advances were partially offset by a 3.2% drop in household and personal product inventories.

Following several months of declines, the inventory-to-sales ratio rose from 1.22 in July to 1.25 in August. The inventory-to-sales ratio is a measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

More details here.

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