Wholesalers shook off a disappointing December to start the New Year strong, helped in part by a price driven surge in the sale of agricultural chemicals, according to Statistics Canada.
Sales by Canadian wholesalers rose a healthy 2.6% in January to $44.1 billion, effectively offsetting the 2.6% drop recorded in December.
In January, six of the seven wholesale sectors reported higher sales, led by very strong growth in the other products" sector (+11.4%). The growth in this sector was driven by higher sales of agricultural chemicals, which also benefited from sharply higher prices during the month.
Wholesalers of machinery and electronic equipment (+2.2%), food, beverage and tobacco products (+2.1%) and building materials (+1.7%) were the other major contributors to January's increase in sales.
The farm products sector, which consists primarily of livestock sales, was the only sector to register a decline (-4.6%) in January.
Sales in constant dollars, which remove the impact of price changes to provide an indicator of volume sales, increased by 3.5 % during the month.
'Other Products' Strong The "other products" sector racked up its highest monthly gain on record (+11.4%) in January, thanks in large part to a significant increase in the sale of agricultural chemicals. These products account for roughly one-quarter of sales in this sector, which also includes wholesalers of recycled materials, paper products and non-agricultural chemicals.
A significant part of the increase in agricultural chemical sales was price-driven. January is typically the time of the year when many contracts are re-negotiated, and with global demand for agricultural inputs surging, prices for these products have risen significantly over the past year. According to the latest figures from the Industrial Product Price Index, overall fertilizer prices were 25% higher in January compared with the same month in 2007.
Much of this demand is coming from developing markets such as China, India and Brazil, which has in turn led to a large increase in exports over the past year. After registering a 21.6% increase in 2007, exports of fertilizers and fertilizer materials continued to move ahead in January, rising a further 26.4% according to the latest International Trade data.
Gains in Machinery &Electronic Equipment Wholesalers of machinery and electronic equipment put a soft December (-1.3%) behind them as sales moved ahead by 2.2% in January to $9.5 billion. This was the fourth increase in five months for this sector.
All three trade groups that make up this sector reported higher sales in January: sales of computers and other electronic equipment rose 3.4%, office and professional equipment was up 3.0%, while sales of machinery and equipment posted a more modest rise of 1.2%.
With businesses continuing to take advantage of the strong Canadian dollar to invest in new machinery and equipment, prospects for this sector remain positive. According to the latest Survey of Private and Public Investment, overall investment in machinery and equipment is expected to increase for a sixth consecutive year in 2008, up a further 5.7%.
Sales of food, beverage and tobacco products recover from December drop Wholesalers in the food, beverage and tobacco products sector recovered from a weak December (-3.0%) to register a 2.1% increase in sales in January to $7.9 billion.
The food products trade group was behind all of the gain in January, as sales rose 3.2% to $7.3 billion. This was in marked contrast to the alcohol and tobacco group, where sales fell 10.0% to $595 million.
By Province Nearly all the provinces and territories recorded higher sales in January.