The 2020 Mid-Year Economic Update_long

Canada: Wholesale Revenues Up 6.5% in 2006


Release taken from Statistics Canada


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Wholesalers ended the year on a high note, with the automotive sector providing much of the impetus for the largest monthly gain in over two years.


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Wholesale sales jumped&nbsp ; 2.7% in December to&nbsp ; $42.8&nbsp ; billion, following a 0.3% rise in November. December's increase was the largest since March&nbsp ; 2004.


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While a solid showing by the automotive sector (+7.5%) was behind much of December's rise, there were also notable gains in the other products" (mainly agricultural products, chemicals and recycled metals), personal and household goods and building materials sectors. Three sectors registered drops in ...

of all provinces and territories during the second half of&nbsp ; 2006, a poor start to the year meant that overall sales for the year ended up little changed from the previous year.


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December was also a good month for wholesalers in Newfoundland and Labrador, as higher sales in the machinery and equipment and food product sectors drove overall sales in the province up&nbsp ; 6.6% to&nbsp ; $261&nbsp ; million. This was the largest monthly increase since October&nbsp ; 2004&nbsp ; and capped a strong year for the province which, like Alberta, has benefited from the recent boom in the energy sector.


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The biggest decline in December came in Alberta (-2.1%), where lower sales of food and beverages were mostly to blame. This was the second decline in total sales in three months for the province.


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Inventories


Inventories recorded their largest one month drop since May&nbsp ; 2004, down&nbsp ; 0.8% to&nbsp ; $53.4&nbsp ; billion. Declines were registered in&nbsp ; 9&nbsp ; out of&nbsp ; 15&nbsp ; trade groups, accounting for around&nbsp ; 80% of inventories, with the largest declines coming in the motor vehicle and pharmaceutical trade groups.


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December’s drop reverses a string of recent increases which, coupled with relatively stagnant sales, had pushed the inventory-to-shipment ratio to its highest level in over three years. The substantial rise in sales in December, coupled with the significant drop in inventories, resulted in a notable decline in the inventory-to-shipment ratio from&nbsp ; 1.29&nbsp ; to&nbsp ; 1.25.


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With the exception of a few minor declines, wholesale inventories have been rising almost continuously since the end of&nbsp ; 2003. &nbsp ;

the year, trailing only the&nbsp ; 10.9% increase in July. December’s increase comes as good news for motor vehicle wholesalers, which had seen a fairly sharp decline in sales since hitting a record high in July.


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The launch of new models (some of which had been delayed due to production setbacks) was a major factor behind the December increase, and follows a surge in motor vehicle manufacturing shipments in November. With many of these new vehicles destined for the US market, passenger car exports recorded their highest monthly increase (+17.4%) in over a year in December, according to the latest International Trade data.


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December proved to be a little less rosy for wholesalers of motor vehicles and parts, as sales in this trade group declined&nbsp ; 1.9% to&nbsp ; $1.5&nbsp ; billion. Wholesalers in this industry, who do not supply auto plants but sell mainly to retailers and dealers, have posted generally stable sales over the past two years.


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Higher Sales of Pharmaceuticals, Apparel


Sales in the personal and household goods sector grew for the third straight month in December, rising&nbsp ; 2.9% to&nbsp ; $6.4&nbsp ; billion.


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After posting their largest monthly decline in three years in November, sales of pharmaceuticals bounced back strongly in December, up&nbsp ; 5.6% to&nbsp ; $2.8&nbsp ; billion. Sales of pharmaceuticals have grown at a fairly steady pace over the past few years as consumers devote an increasing proportion of their expenditures to health care products. According to data from the Quarterly Retail Commodity Survey, prescription drugs have been one of the fastest growing retail segments over the past several years.


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For apparel wholesalers, December also marked a positive end to the year as sales rose&nbsp ; 7.5% to&nbsp ; $785&nbsp ; million, more than offsetting the decline in November. The unseasonably warm start to the winter may have been a contributing factor, possibly leading retailers to push back their purchases of winter clothing to later in the year.


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After sales surged to a record high in November, wholesalers of household and personal products took a breather in December as sales eased down&nbsp ; 0.9% to&nbsp ; $2.8&nbsp ; billion.


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The longer term trend for the household and personal products trade group remains extremely strong, thanks to record levels of retail sales and employment levels that continue to hit new highs.


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A three month slide in the sale of “other products” came to an abrupt end in December, as sales bounced back sharply, up&nbsp ; 7.3% to&nbsp ; $5.3&nbsp ; billion. A pickup in fertilizer sales was behind much of the increase in December, the largest since March&nbsp ; 2005.


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Despite ending the year on a high note, the sales trend for this sector has eased somewhat in&nbsp ; 2006, mostly as a result of lower than anticipated fertilizer sales. Many of these sales are made to overseas markets and, while there was a sharp pickup in fertilizer exports over the second half of the year, earlier delays in implementing a new fertilizer pricing agreement led to a&nbsp ; 13% drop in fertilizer exports in&nbsp ; 2006.


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By Province


Although eight provinces and territories recorded higher sales in December, the lion’s share of the increase came in Ontario, which recorded its highest monthly increase of the year. While higher sales in the auto sector were responsible for most of the growth in Ontario, wholesalers of personal and household goods and building materials also did well.


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The jump in fertilizer sales gave a boost to Saskatchewan, as sales in the province rose&nbsp ; 5.0% in December to&nbsp ; $1.2&nbsp ; billion. Although the province managed to record the highest growth
Release taken from Statistics Canada


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Wholesalers ended the year on a high note, with the automotive sector providing much of the impetus for the largest monthly gain in over two years.


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Wholesale sales jumped&nbsp ; 2.7% in December to&nbsp ; $42.8&nbsp ; billion, following a 0.3% rise in November. December’s increase was the largest since March&nbsp ; 2004.


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While a solid showing by the automotive sector (+7.5%) was behind much of December’s rise, there were also notable gains in the other products” (mainly agricultural products, chemicals and recycled metals), personal and household goods and building materials sectors. Three sectors registered drops in December, with the most significant decline coming in the food, beverage and tobacco products sector. Sales outside of the automotive sector increased&nbsp ; 1.6% during the month.


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Not surprisingly, the jump in auto sales was most keenly felt in Ontario (the home of Canada’s auto sector) as sales in the province rose by&nbsp ; 5.3%. Most other provinces and territories also registered gains during the month.


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Also noteworthy was the&nbsp ; 0.8% decline in total wholesale inventories in December. While seemingly small, this was the largest one month decline since May&nbsp ; 2003&nbsp ; and, coupled with the large increase in sales in December, brought the inventory-to-shipment ratio off a three-year high.


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Sales in constant dollars, which exclude the effects of price changes, rose by&nbsp ; 1.3% in December.


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Momentum


December’s strong showing capped another robust year for wholesalers, as&nbsp ; 2006&nbsp ; sales increased&nbsp ; 6.5% to&nbsp ; $501&nbsp ; billion.


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This was the third consecutive year of strong growth for the wholesale industry, which has proved to be one of the economy’s leading lights in recent years. As key intermediaries in the economy, wholesalers have benefited from both strong business investment, which has been supported by healthy corporate balance sheets, as well as record employment levels that continue to support solid growth in consumer spending.


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Overall, six out of seven wholesale sectors grew in&nbsp ; 2006, the only exception being the farm products sector. The machinery and electronic equipment sector led the way with a&nbsp ; 9.7% increase, its highest since&nbsp ; 1997. Continued high levels of business investment in the oil and gas industry were again a key factor behind the growth in this sector.


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With much of the recent business investment going to fuel the boom in Western Canada,&nbsp ; 2006&nbsp ; also proved to be another excellent year for Alberta’s wholesalers, who led the nation with a&nbsp ; 13.0% increase in sales. The gain was all the more impressive in light of the&nbsp ; 15.5% rise recorded in&nbsp ; 2005&nbsp ; and marked the third consecutive year of double-digit growth for the province.


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Sales in constant dollars, which exclude the effects of price fluctuations, increased by&nbsp ; 8.7% in&nbsp ; 2006. This was the fourth year in a row that constant dollar sales have exceeded sales in current dollars. The difference between the two series has been most apparent in the computer and electronics trade group, where rapid price declines have resulted in much lower growth rates in the current dollar series during this period.


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A more detailed look at wholesale trade in&nbsp ; 2006&nbsp ; will be release in the spring.


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Auto Sector Gets Boost


Motor vehicle sales jumped&nbsp ; 9.9% in December to&nbsp ; $6.7&nbsp ; billion, the second largest increase of

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