Wholesale sales in Canada continued their upward trend, posting strong growth for the fourth straight year in 2007.
Increased demand for agricultural products in the other products”sector led the growth with its best showing since 2003, according to “Wholesale Trade: The Year 2007 in Review,”a recently released report from Statistics Canada. Machinery and electronic equipment sales, which accounts for 21 percent of wholesale sales, also contributed by posting gains higher than total wholesale growth.
Nationally, wholesale revenues increased 5.5 percent to $517.8 billion. Since 2002, the rate of wholesale sales growth has averaged 5 percent, almost double growth for the economy as a whole, which posted average growth of 2.7 percent.
In addition, growth in wholesale industries contributed to job creation across Canada in 2007. Wholesalers added 759,000 workers, which equals 5.3 percent of total employment.
This excerpted piece from the Statistics Canada study highlights the performance of wholesale industries in Canada for 2007. (Unless otherwise specified, all data are in current Canadian dollars; they have not been adjusted for inflation.)
Nearly one-eighth of Canada’s wholesale sales in 2007 were in the “other products”sector. The sector includes agricultural chemicals, fertilizers, animal feed and other farm supplies as well as recycled materials and paper products.
This sector has grown at an average rate of 7.6 percent annually since 2002; in 2007, it posted a growth rate of 10.5 percent, with sales exceeding $63.6 billion.
Much of this growth was due to increased sales of agricultural materials, like fertilizer and animal feed, resulting from increased global demand. Higher demand and higher prices for Canadian crops on the global market led to increased profits in the sector.
Machinery and Electronic Equipment
The largest wholesale sector in Canada continued to show better-than-average gains in 2007, posting a growth rate of 7 percent over 2006. Though solid, this figure represents a slowdown over the previous two years, which saw growth of 8.6 percent in 2006 and 11 percent in 2005. Sales in the machinery and electronic equipment totaled $110.4 billion.
Decreasing investment in mining and oil and gas extraction companies contributed to this slowdown. Investment in these areas declined by 6.4 percent in 2007, though investment in other areas helped offset the loss.
A portion of the growth can be attributed to the rebounding of the personal computer market since 2005. Sales of computers and other electronic equipment recorded their highest numbers since 1999 even as prices have declined.
Personal and Household Goods
Consumer spending is up across Canada. Low inflation and interest rates coupled with strong employment and income levels have provided for a positive marketplace for consumers. As such, the highly consumer-driven sector of personal and household goods is also up 7.2 percent from 2006.
In addition, sales of pharmaceuticals aided the sector’s growth. Between October 2006 and September 2007, Canadians purchased a total of 448 million prescriptions, spending more than $20.7 billion.
The prairie provinces of Saskatchewan, Manitoba and Alberta led the way for provincial wholesale growth across Canada, posting an average growth rate of 9.2 percent annually since 2002 compared with 5 percent nationally.
After a weak showing in 2006, Saskatchewan posted the highest rate of growth among the provinces for 2007, up 19.6 percent. Sales within the province followed the national patterns, with growth driven by the “other products”and machinery and electronic equipment sectors. The provincial growth rates, however, solidly outpaced national rates by more than double, posting increases of 38 percent and 16.1 percent respectively.
Manitoba’s growth rate of 11.8 percent relied even more heavily on growth in the “other products”and machinery and electronic equipment sectors, as growth in the other sectors stayed well below average.
Alberta’s growth rate of 4.5 percent tempered the economic surge in the Prairies. It represents the first posting below the national average since 2002. A sharp decline in auto sales and machinery and electronic equipment drove the slowdown in the province.
The surging economy in Newfoundland and Labrador led the Atlantic region’s wholesale rebound in 2007. Regional growth matched national growth at 5.5 percent as compared to growth of 0.4 percent in 2006.
Much of that growth can be attributed to increased mining and extraction activities, part of the machinery and electronic equipment sector, in Newfoundland and Labrador. The region, which also includes New Brunswick, Prince Edward Island and Nova Scotia, also saw solid gains in the food, beverages and tobacco products sector -one of the key sectors for the downturn of 2006. Nova Scotia was the only province in the region to post decreases in this sector.
British Columbia posted its sixth straight year of growth higher than the national average. Sales increased 8.6 percent in 2007 to $53.5 billion. A strong economy drove growth in all of the wholesale sectors, but especially in the consumer driven sectors of food, beverages and tobacco (+13.6 percent) and personal and household goods (+20.9 percent).
The housing slump in the U.S. continued to have a negative influence on lumber. Exports from British Columbia fell by 21.8 percent, the third consecutive year of a decline in sales.
Ontario continued its dominance of the Canadian wholesale sector, representing 50.7 percent of total sales in 2007. But, slow growth continues to erode that figure, which was 54.2 percent in 2006. Sales increased by 4.2 percent in 2007, the fifth consecutive year that increases have been below the national average.
Though the machinery and electronic equipment sector and the “other products”sectors posted positive growth, they were offset by declines in building materials.
Quebec also posted growth below the national average. At 5.2 percent, however, the rate represents a rebound from a well-below average 2006. The growth was driven by sales in the personal and household goods sector, which improved 8.2 percent over 2006. Like Alberta, Quebec suffered from decreased sales of automobiles (-1.6 percent) and slowing sales of auto parts and accessories (+0.1 percent).
Growth in the Northern Territories outpaced growth in most of the provinces in 2007. Wholesale sales in Northwest Territories increased by 25.2 percent, and topped sales in Prince Edward Island. The personal and household goods sector showed the strongest growth, accounting for 68.5 percent of wholesale growth. Diamond production also surged by 13.1 percent from 2006.
Download the full report, “Wholesale Trade: The Year 2007 in Review”online at MDM’s Databank. – Jenel Stelton-Holtmeier