Canada: Wholesale Trade, October 2016

Wholesale sales increased 1.1% to $56.6 billion in October, offsetting most of September’s 1.5% decrease. Gains were recorded in five subsectors, led by higher sales in the building material and supplies, motor vehicle and parts, and food, beverage and tobacco subsectors.

In volume terms, wholesale sales increased 0.9%.

Higher sales in five subsectors

Sales rose in five of seven subsectors, representing approximately 87% of total wholesale sales.

The building material and supplies subsector recorded the largest increase in dollar terms, up 2.8% to $7.6 billion on the strength of sales in the lumber, millwork, hardware and other building supplies industry, which recorded the lone increase (+5.6%) and reached a record high. Exports of forestry products and building and packaging materials increased in October.

Sales in the motor vehicle and parts subsector rose 1.8% to $11.3 billion in October. While sales increased in two of three industries in the subsector, sales in the motor vehicle industry (+1.2%) rose to a record high and accounted for more than half of the advance in the subsector. Imports and exports of motor vehicles and parts increased in October.

In the food, beverage and tobacco subsector, sales increased 1.7% to $10.9 billion in October, the first increase in three months and the highest level since May 2016. Sales in the food industry rose 1.8%, erasing the 1.8% decline observed in September.

The machinery, equipment and supplies subsector rose 1.1% to $11.0 billion, a fifth increase in six months. Sales in the other machinery, equipment and supplies industry (+4.8%) accounted for most of the gain.

Sales in the miscellaneous subsector decreased 2.0% to $6.8 billion, the second consecutive decline for the subsector. Three of the five industries in the subsector recorded lower sales, led by the agricultural supplies industry (-10.2%). This was the lowest level for the industry since November 2014.

Sales increase in four provinces

Sales increased in four provinces, with Quebec and Ontario recording the largest dollar-value increases.

Quebec increased 3.4% to $10.4 billion in October with gains in six of seven subsectors. The largest contributors to Quebec’s rise were the motor vehicle and parts subsector and the food, beverage and tobacco subsector. This was Quebec’s first increase in three months.

Sales in Ontario increased 0.9% to $29.3 billion, recording gains in five of the past six months. The gains in October were on the strength of the building material and supplies subsector and the miscellaneous subsector.

The machinery, equipment and supplies subsector and the motor vehicle and parts subsector contributed to the higher sales in British Columbia, which increased 3.4% from September to $5.7 billion, with gains in six of seven subsectors. The province recorded a year-over-year increase of 10.8%.

Sales in Nova Scotia also increased in October, up 2.2% to $786 million. The majority of subsectors posted gains, but the food, beverage and tobacco subsector added the most to the monthly growth within the province. This was Nova Scotia’s third monthly increase in the past four months.

Declines in six provinces in October were led by Saskatchewan, Alberta and Manitoba, with the miscellaneous subsector leading the decrease for all three provinces.

Saskatchewan fell 8.1% from September to $1.9 billion, declining 16.6% year over year. Alberta (-0.4%) declined to $6.1 billion, its fifth decrease in the past seven months, and recorded a 6.2% decline year to date. Compared with September, Manitoba (-1.5%) decreased to $1.4 billion, with declines in five of seven subsectors, and a year-over-year decline of 4.1%.

New Brunswick (-1.0%), Newfoundland and Labrador (-0.5%) and Prince Edward Island (-1.4%) all saw decreases in October. While the miscellaneous subsector contributed most to declines in Newfoundland and Labrador, the food, beverage and tobacco subsector led the decrease in New Brunswick and Prince Edward Island.

Inventories rise

Wholesale inventories rose 0.8% to $72.9 billion in October, a third consecutive increase. Gains were recorded in five of seven subsectors, together representing 76% of wholesale inventories.

Inventories in the personal and household goods subsector (+2.0%) posted the largest increase in dollar terms, reaching their highest level on record in October. The miscellaneous subsector (+1.7%) reported its first gain in eight months.

Both the machinery, equipment and supplies subsector (+0.5%) and the building material and supplies subsector (+0.6%) recorded higher inventories for the third consecutive month.

Inventories in the food, beverage and tobacco subsector were unchanged in October.

The motor vehicle and parts subsector (-0.3%) recorded its first decline in five months.

The inventory-to-sales ratio was unchanged at 1.29 in October. This ratio is a measure of the time in months required to exhaust inventories if sales were to remain at their current level.

StatsCanada

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell