Canada: Wholesale Trade, September 2017

Following two months of increases, wholesale sales declined 1.2% to $62.0 billion in September, the second decline of 2017. Decreases were recorded in five of seven subsectors, led by the personal and household goods and the food, beverage and tobacco subsectors.

In volume terms, wholesale sales declined 1.1%.

In the third quarter, current dollar wholesale sales increased 1.5% while constant dollar sales increased 2.0%. For both current and constant dollars, this marked the sixth consecutive quarterly increase.

September decline attributable to decreases in five of seven subsectors

The personal and household goods subsector reported the largest decline in dollar terms in September, dropping 4.8% to $8.6 billion. This was the first decline since November 2016 and more than offsets the 3.2% increase in August. All but one industry in this subsector reported declines in September, led by the textile, clothing and footwear industry.

Sales in the food, beverage and tobacco subsector fell 2.2% to $11.7 billion, a second consecutive monthly decline and bringing the subsector to its lowest level since March 2017. While all three industries declined, the decrease in the food industry was the leading contributor to September’s downward movement.

Wholesalers in the machinery, equipment and supplies subsector posted a 2.1% decrease in September, to $12.0 billion. This was the second consecutive decline for the subsector and the third decrease in five months. Lower sales in the subsector were mostly attributable to the farm, lawn and garden machinery and equipment (-10.2%) and the computer and communications equipment and supplies (-3.3%) industries.

Meanwhile, sales in the building material and supplies subsector increased 2.6% to $8.9 billion in September, on the strength of gains recorded by the lumber, millwork, hardware and other building supplies industry (+4.9%).

Sales in the motor vehicle and parts subsector increased 1.4% to $12.0 billion, led by the motor vehicle industry (+2.2%).

Sales down in eight provinces, led by Quebec and Ontario

Quebec recorded the largest decline of all provinces in September, with sales falling 2.4% to $11.0 billion, their first decrease in three months. Sales were down in six of seven subsectors, led by decreases in the food, beverage and tobacco (-3.1%) and the machinery, equipment and supplies (-5.4%) subsectors.

Ontario recorded the second largest dollar-value decline in September, with sales decreasing 0.6% to $32.0 billion. Decreases were mainly attributable to declines in the personal and household goods (-6.6%) and the miscellaneous (-2.6%) subsectors, and were partially offset by gains in the motor vehicle and parts subsector. This was Ontario’s first monthly decline since November 2016.

Sales in British Columbia declined for the second consecutive month, dropping 2.0% to $6.5 billion. Decreases were led by the food, beverage and tobacco (-5.1%) and the motor vehicle and parts (-6.8%) subsectors. While sales in British Columbia have declined 3.1% over the past two months, sales remain up 13.1% year over year.

Sales in Saskatchewan recorded a fourth decrease in five months, falling 5.7% in September to $2.2 billion. A 19.2% decline in the machinery, equipment and supplies subsector accounted for the majority of the drop. Saskatchewan has recorded the lowest growth rate of all provinces year over year, increasing by 0.7% in wholesale sales since last September.

Alberta was one of two provinces to record an increase in September, rising 0.6% to $6.7 billion. Alberta’s growth was driven by increases in the machinery, equipment and supplies (+2.7%) and the farm products (+42.7%) subsectors. In August, Alberta recorded the largest decline among the provinces.

Inventories build up in September

Wholesale inventories rose 0.6% to $81.1 billion in September, the fifth increase in six months. In dollar terms, the machinery, equipment and supplies subsector (+2.5%) posted the largest gain, following a 1.2% decline in August. The farm, lawn and garden machinery and equipment (+7.4%) and the construction, forestry and mining (+0.7%) industries contributed the most to the upturn.

The building materials and supplies subsector (+3.5%) rose for the second consecutive month, on the strength of higher inventories in the lumber, millwork, hardware and other supplies industry (+6.1%). The electrical, plumbing, heating, air-conditioning equipment and supplies industry also contributed to the increase.

The food, beverage and tobacco (-0.3%) and the personal and household goods (-1.5%) subsectors declined for the first time in six months.

Inventories in the farm product subsector fell 8.0% in September, a fifth decrease in six months.

The motor vehicle and parts subsector fell 1.8% in September after two monthly increases.

The inventory-to-sales ratio increased from 1.29 in August to 1.31 in September. 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