(+2.5%).

 

The rebound in machinery and equipment sales follows a large 4.1% decline in September. While sales in this trade group have been somewhat sluggish over the past several months, this follows healthy gains made earlier in the year. Wholesalers of equipment destined for the mining and energy industries have done particular well so far this year as companies continue to invest in the booming resource sector.

 

Following two consecutive monthly declines, sales of computer and other electronic equipment reversed course in October, rising 2.5% to $2.7 billion. Wholesalers of office and professional equipment also did well during the month, as sales increased 1.9% to $2.1 billion.

 

Most Provinces and Territories Down

Of the 13 provinces and territories, 9 registered declines in October, with the most significant drops coming in Saskatchewan (-4.9%), Alberta (-1.3%) and Prince Edward Island (-6.4%).

 

In Saskatchewan, lower sales of agricultural products, mainly fertilizers, were behind most of the decline. With products related to the agricultural industry accounting for around half of all wholesale sales in Saskatchewan, sales in this province tend to be quite volatile. The decline in Alberta was the first in six months for the province, and was primarily due to lower sales of automotive and “other” products. Meanwhile, sales in Prince Edward Island were hit by lower sales of food products, mainly fish and seafood, as well as machinery and equipment.

 

British Columbia recorded the most significant provincial increase in sales (+1.9%), recouping some of the ground that was lost in September (-4.7%). Higher sales of “other products” and machinery and equipment were behind most of rise in October.

 

Inventory-to-Sales Ratio Rises Again

After hitting a three-year high in September, the inventory-to-sales ratio edged up again in October, rising from 1.27 to 1.28. The ratio measures the amount of time (in months) that it would take to exhaust inventories at the current rate of sales. Of 15 trade groups, 12 recorded higher inventories in October, with the most significant increases coming in the automotive and pharmaceutical groups.

Release taken from Statistics Canada

Canadian wholesale sales edged down slightly in October, leading the industry to its first back-to-back monthly declines in two years. Lower sales of automotive products were responsible for most of October’s decrease.

After falling 1.8% in September, wholesale sales slipped a further 0.2% in October to $41.6 billion. Most of the decline was caused by another significant drop in automotive sales (-3.2%), which have fallen continuously since hitting a peak in July. Small declines in sales were also registered by wholesalers of building materials, “other products” and food, beverage and tobacco products.

 

A more positive picture emerges once the drop in automotive sales is excluded, with overall sales outside of the auto sector rising 0.4% in October. Wholesalers of machinery and electronic equipment (+2.5%), personal and household goods (+1.2%) and farm products (+4.7%) did relatively well during the month.

While the overall trend for the wholesale sector remains positive, it has eased somewhat over the past few months, in line with the general softening of the Canadian economy. According to the latest quarterly gross domestic product release, the Canadian economy grew at an annualized rate of 1.7% in the third quarter, its slowest pace in three years.

 

Sales in constant dollars decreased 0.8% in October.

Auto Sales

The automotive sector continued its recent weakening trend in October as sales fell a further 3.2% to $7.5 billion, the sector’s lowest monthly sales level since July 2005. Sales of motor vehicles (-3.4%) were behind most of the decline, although sales of motor vehicle parts also fell (-2.6%) during the month.

 

October’s decline was the third in a row for the motor vehicle trade group, and follows even larger declines in both August and September. Part of the recent weakness in this trade group can be explained by falling vehicle exports to the U.S., which have been on a downward trend since the start of the year. Sales of vehicles destined for the Canadian market on the other hand have held up reasonably well, with domestic vehicle sales rising 1.6% during the first 10 months of the year, according to the latest numbers from the New Motor Vehicles Sales Survey.

 

Building Materials Falls

Sales in the building materials sector declined 0.9% to $5.8 billion in October, with the decline split between the building supplies and lumber and millwork trade groups. Sales of metal products were essentially flat during the month.

 

Building supply sales fell 1.1% to $3.6 billion in October. After posting strong growth in the first quarter, sales in this trade group have levelled off over the past six months or so, in line with the cooling of the Canadian housing market. Total investment in residential construction registered a second consecutive quarterly drop in the third quarter.

 

Following two months of increases, the lumber and millwork trade group resumed its downward slide in October (-1.7%). Sales in this trade group have now fallen for six of the past eight months, as lumber wholesalers continue to be buffeted by the slowdown in the US housing market, lower lumber prices and the strong Canadian dollar.

 

Machinery and Electronic Equipment

After posting a significant decline in September, wholesalers in the machinery and electronic equipment sector saw their sales rise by 2.5% in October to $8.9 billion. All three trade groups in this sector registered healthy gains during the month, led by machinery and equipment (+2.9%) and computers and other electronic equipment