The 2020 Mid-Year Economic Update_long

Canadian Wholesale Revenues Rebound in July

Source: Statistics Canada

Following a weak second quarter, wholesale sales rebounded in July, spurred on by a turnaround in automotive sales, as well as healthy demand for machinery, and personal and household goods.
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Wholesalers sold an estimated&nbsp ; $44.1&nbsp ; billion worth of goods in July, a&nbsp ; 2.0% gain over June, surpassing the previous record high reached in March.
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The key automotive products sector led the way with a&nbsp ; 4.9% gain on the back of strong demand for motor vehicles. July also proved to be a good month for wholesalers of personal and household goods (+4.0%), machinery and electronic equipment (+2.8%), and building materials (+1.3%). Sales excluding the automotive sector rose&nbsp ; 1.3% in July.
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region, which is currently experiencing an unprecedented boom in mining exploration and mine development. This investment has also spilled over into other areas of the economy, notably housing construction.
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According to the latest residential construction investment data, total investment in residential construction in Nunavut registered an almost sixfold increase in the first six months of&nbsp ; 2007&nbsp ; compared with the same period in&nbsp ; 2006.
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Inventory-to-Sales Ratio Falls
Wholesale inventories increased&nbsp ; 0.6% in July to&nbsp ; $54.4&nbsp ; billion.
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Of&nbsp ; 15&nbsp ; trade groups,&nbsp ; 8&nbsp ; reported higher inventory levels in July. The most notable increases were in the pharmaceutical (+2.8%), “other products” (+2.3%), motor vehicles (+1.4%) and motor vehicles parts and accessories (+1.9%) trade groups. These increases were partially offset by drops in metal products (-2.9%) and computer and electronic equipment (-1.4%) inventories.
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With sales rising at an even faster pace in July, the inventory-to-sales ratio declined from&nbsp ; 1.25&nbsp ; in June to&nbsp ; 1.23&nbsp ; in July, its lowest level in four months. The pace of inventory accumulation has eased somewhat in recent months, largely the result of reductions in motor vehicles and metal products inventories.
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The inventory-to-sales ratio is a key measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Wholesale merchants’ inventories and inventory-to-sales ratio
&nbsp ; July 2006 April 2007r May 2007r June 2007r July 2007p June to July 2007 July 2006 to July 2007 June 2007 equipment have dropped over&nbsp ; 17% since&nbsp ; 2002, largely the result of the appreciation of the Canadian dollar.
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The strong demand for machinery and equipment has also helped boost profits for wholesalers in this sector. According to the latest Quarterly Survey of Financial Statistics for Enterprises, wholesalers of machinery and equipment recorded the strongest profit growth among all wholesale industries during the second quarter of&nbsp ; 2007.
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By Sector, Province
The personal and household goods sector registered its biggest increase (+4.0%) in&nbsp ; 2007, reaching&nbsp ; $6.5&nbsp ; billion, more than offsetting June’s decline (-1.7%).
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All three trade groups in this sector contributed to the rise, led by a&nbsp ; 5.5% increase from the pharmaceutical trade group. This was the largest monthly rise so far in&nbsp ; 2007&nbsp ; for this trade group, which continues to benefit from high consumer demand.
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Apparel wholesalers had another strong month, as sales rose&nbsp ; 4.4% in July following a&nbsp ; 5.9% increase in June. Prior to this, sales had fallen for five consecutive months after hitting a record high in December&nbsp ; 2006.
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After declining&nbsp ; 3.7% in June, sales of household and personal goods resumed their upward momentum in July, rising&nbsp ; 2.2%. This was the fifth increase in&nbsp ; 2007&nbsp ; for this trade group.
Ontario and British Columbia lead the way
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Ontario was the main beneficiary of the pickup in the automotive sector, as strong demand for motor vehicles helped the province post its biggest increase (+2.5%) of the year, reaching&nbsp ; $22.0&nbsp ; billion, more than offsetting June’s decline (-1.1%). Notable gains were also made by wholesalers in the machinery and electronic equipment, and personal and household goods sectors.
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July’s increase helped to offset some of the recent weakness in Ontario, where sales fell in the second quarter as a result of weaker demand for automotive products.
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Wholesale sales in British Columbia continued their upward momentum in July, rising a further&nbsp ; 2.2% to&nbsp ; $4.7&nbsp ; billion. Higher sales of “other products”, personal and household goods, and building materials were behind most of the rise in July. Sales in the province have risen almost continuously since the start of&nbsp ; 2007.
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After registering a substantial increase (+6.4%) in June & mdash; the first in three months & mdash; wholesale sales in Alberta rose at a more modest rate in July, up&nbsp ; 0.9% to&nbsp ; $5.5&nbsp ; billion. Higher sales in the “other products” and automotive products sectors were partially offset by weakness in the food, beverages and tobacco products sector, as well as the farm products sector.
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In Manitoba, sales advanced&nbsp ; 8.7% in July to&nbsp ; $1.1&nbsp ; billion, all but reversing June’s decline. Higher sales of “other products” and automotive products, both of which registered significant declines in June, were behind most of the increase.
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The picture was less rosy in Saskatchewan, where sales fell for the fourth consecutive month in July, down&nbsp ; 0.8% to&nbsp ; $1.3&nbsp ; billion. Nevertheless, sales in the first seven months of&nbsp ; 2007&nbsp ; were still up substantially over the same period in&nbsp ; 2006, following a very strong first quarter.
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In the Atlantic Provinces, only Newfoundland and Labrador registered stronger sales in July, up&nbsp ; 7.4% to&nbsp ; $293&nbsp ; million. Rising sales of food products, as well as machinery and electronic equipment were behind most of the increase, which was the third in a row for the province.
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Also noteworthy in July was the large increase in Nunavut, where overall sales soared&nbsp ; 238% to&nbsp ; $10.0&nbsp ; million. This increase reflected the dramatic jump in investment in theSource: Statistics Canada

Following a weak second quarter, wholesale sales rebounded in July, spurred on by a turnaround in automotive sales, as well as healthy demand for machinery, and personal and household goods.
&nbsp ;
Wholesalers sold an estimated&nbsp ; $44.1&nbsp ; billion worth of goods in July, a&nbsp ; 2.0% gain over June, surpassing the previous record high reached in March.
&nbsp ;
The key automotive products sector led the way with a&nbsp ; 4.9% gain on the back of strong demand for motor vehicles. July also proved to be a good month for wholesalers of personal and household goods (+4.0%), machinery and electronic equipment (+2.8%), and building materials (+1.3%). Sales excluding the automotive sector rose&nbsp ; 1.3% in July.
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The most significant decline came in the food, beverages and tobacco products sector, where sales fell (-0.8%) for the third consecutive month.
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July’s strong performance in the wholesale industry reversed some of the second quarter’s weakness, when overall sales fell for the first time in almost four years, largely the result of weak automotive sales.
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Sales in constant prices, which take price fluctuations into account, rose&nbsp ; 2.5% in July.
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Automotive Products Bounce Back
The automotive products sector bounced back in July, as sales rose&nbsp ; 4.9% to&nbsp ; $8.3&nbsp ; billion following a&nbsp ; 0.9% decline in June. Increased sales of motor vehicles (+6.2%) accounted for all of the rise, while sales of motor vehicle parts and accessories edged down (-0.3%).
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Although still not back to the record level reached in March&nbsp ; 2007, July’s increase in motor vehicle sales marks a turnaround from the second quarter, when sales of motor vehicles fell&nbsp ; 5.0%, the largest quarterly decline since the third quarter of&nbsp ; 2004.
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With imported vehicles accounting for over half of the sales made by wholesalers, July’s increase also coincided with a turnaround in automotive imports. According to the latest Canadian international merchandise trade release, passenger car imports surged&nbsp ; 26.4% in July. This represented the largest monthly increase since September&nbsp ; 2003&nbsp ; and brought an end to a string of three consecutive monthly declines in passenger car imports.
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The slight decline in the sale of motor vehicle parts and accessories in July continued a series of fairly lacklustre performances for this trade group, which has seen little or no growth over the past two years. Wholesalers in this industry sell mainly to retailers and dealers.
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Demand for Machinery & Electronic Equipment
Sales in the machinery and electronic equipment sector rose for the third consecutive month in July, up&nbsp ; 2.8% to a record high of&nbsp ; $9.5&nbsp ; billion.
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Of the three trade groups making up this sector, wholesalers of machinery and equipment were the main beneficiaries of the rise, as sales in this trade group jumped&nbsp ; 6.1% in July to&nbsp ; $4.7&nbsp ; billion. The office and professional equipment trade group registered a more modest rise (+0.6%), while the computer and other electronic equipment trade group fared less well (-0.9%).
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July’s increase in the machinery and equipment trade group brought sales to a new high, eclipsing the previous peak reached in March&nbsp ; 2007. Despite slackening demand for mining and oil and gas well machinery& mdash; sales of which have declined significantly since their peak in early&nbsp ; 2006& mdash; demand for other types of machinery, notably construction and industrial machinery, remains strong.
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As most of the machinery and equipment sold in Canada is imported, businesses have been able to take advantage of the strength of the Canadian dollar to purchase equipment at a lower price. Aggregate prices for machinery and

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