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Release taken from Statistics Canada, http://www.statcan.ca/
A pullback in the automotive sector was not enough to dampen wholesale sales in August, as wide ranging gains in other sectors led the wholesale industry to its third increase in four months.
Wholesale sales rose 0.5% to $42.6 billion in August, following a 2.2% rise in July. The increase came despite a large drop (-7.4%) in automotive product sales, which returned to more normal levels after posting very strong growth in July. This sector accounts for approximately one-fifth of all wholesale sales, so any significant drop will normally be reflected in the overall wholesale number.
Outside of the automotive sector, sales advanced at a robust 2.6% clip in August, with all six of the remaining wholesale sectors registering gains. Wholesalers of "other products" (mainly agricultural products, chemicals and recycled metals), personal and household goods, and food, beverages and tobacco products were among the most notable gainers.
The sales trend for wholesale has generally been rising since September 2003, in line with the growth in the Canadian economy. As key intermediaries in the economy, wholesalers have been able to benefit from both the surge in business investment as well as strong consumer demand during this period.
Sales in constant dollars, which exclude the effects of price fluctuations, increased by 2.0% in August.
Nevertheless, wholesalers of motor vehicles could be facing a difficult period over the coming months, as weakening US housing sales erode consumer confidence south of the border. The US is a key market for Canadian auto wholesalers.
The rise in agricultural input sales was mostly related to the fertilizer industry, where the implementation of a new pricing agreement encouraged buyers to return to the market after several months on the sidelines. Delays in reaching a new agreement have had a significant impact on sales in recent months, as well as forcing some Canadian fertilizer manufacturers to shut down their plants for longer periods than usual during the second quarter of the year. Much of the fertilizer produced in Canada is exported to China and Brazil, and with the new agreement in place, exports of fertilizer surged 39.7% in August.
Sales of household goods have generally been rising since September 2003, as an increasingly favorable job market and strong housing sales continue to spur demand for consumer related items. Despite a recent slowdown, housing starts for the first eight months of the year remain ahead of last year's level and housing prices, particularly in Western