Canada: Wholesale trade, September 2018

Wholesale sales declined for a second consecutive month, down 0.5% to $63.2 billion in September. Lower sales were recorded in five of seven subsectors, led by the machinery, equipment and supplies and the personal and household goods subsectors.

In volume terms, wholesale sales declined 0.7%.

In the third quarter, wholesale sales increased 0.6% in current dollars, while constant dollar sales were unchanged. This was the 10th consecutive quarterly increase in current dollars.

Lower sales in five subsectors

In September, lower sales were recorded in five of seven subsectors, which together accounted for 68% of total wholesale sales.

Following two consecutive monthly gains, sales in the machinery, equipment and supplies subsector declined for the second time in 2018, down 2.0% to $13.0 billion in September. Sales declined in three of the four industries, led by the computer and communication equipment and supplies (-3.3%) and the farm, lawn and garden machinery and equipment (-6.4%) industries.

Sales in the personal and household goods subsector declined 1.6% to $9.0 billion, its second decline in five months. Five of six industries reported declines, with a 17.4% decrease in the toiletries, cosmetics and sundries industry contributing the most to the decline in September.

Sales in the food, beverage and tobacco subsector declined 0.7% to $11.9 billion, led by the food industry (-0.6%).

Sales in the building material and supplies subsector increased 1.5% to $9.5 billion, following a 3.9% decline in August. The lumber, millwork, hardware and other building supplies industry (+3.0%) contributed the most to the gain.

Sales in the motor vehicle and parts subsector rose 0.3% to $10.8 billion. All industries posted higher sales, led by the motor vehicle industry (+0.3%).

On a quarterly basis, the personal and household goods (+3.2%) and the food, beverage and tobacco (+0.9%) subsectors contributed the most to the gain in the third quarter. The motor vehicle and parts subsector declined for the third consecutive quarter (-2.3%).

Sales down in eight provinces, led by Quebec and Ontario

Wholesale sales in Quebec declined for the third time in 2018, down 1.4% to $11.7 billion in September. Sales were down in two of the seven subsectors, led by the motor vehicle and parts subsector. This subsector declined for the second consecutive month, down 12.9% to $1.3 billion. The building material and supplies subsector declined 7.9% to $1.8 billion in September, nearly offsetting the 8.6% increase in August.

Sales in Ontario decreased for the second consecutive month, dropping 0.5% to $32.0 billion. Declines were led by the machinery, equipment and supplies (-3.5%) and the personal and household goods (-3.2%) subsectors. In the machinery, equipment and supplies subsector, sales fell for the fourth time in five months, while sales in the personal and household goods subsector were down following three consecutive monthly gains.

Wholesale sales edged down 0.4% in both Alberta and British Columbia in September. Sales in Alberta fell to $6.9 billion as a result of lower sales in the machinery, equipment and supplies (-2.9%) and the miscellaneous (-5.2%) subsectors. In British Columbia, four of seven subsectors declined, led by the miscellaneous subsector (-10.4%).

In September, sales in the Atlantic provinces were down. Sales in Nova Scotia decreased for the fourth consecutive month, down 1.6% to $836 million in September, led by the motor vehicle and parts subsector. Wholesale sales in New Brunswick (-2.6% to $534 million), Newfoundland and Labrador (-3.5% to $343 million) and Prince Edward Island (-4.1% to $75 million) declined for the third time in four months. The food, beverage and tobacco subsector led the declines in New Brunswick and Newfoundland and Labrador.

In Manitoba, sales increased for the third consecutive month, up 5.0% to $1.7 billion in September, their highest level on record. The gain was attributable to higher sales in all the subsectors. The miscellaneous (+9.6%) and the machinery, equipment and supplies (+6.8%) subsectors were the main contributors to the gain.

Inventories rise in September

Wholesale inventories were up 0.6% to $87.3 billion in September, offsetting the 0.6% decrease in August. Increases were recorded in three of seven subsectors in September, which together accounted for 64% of total wholesale inventories.

In dollar terms, the building material and supplies subsector (+2.4%) recorded the largest gain, as inventories rose in all industries.

The machinery, equipment and supplies subsector (+1.1%) posted its fifth consecutive monthly gain in inventories in September.

Inventories in the motor vehicle and parts subsector (-0.9%) declined for the fourth time in 2018.

The inventory-to-sales ratio increased from 1.36 in August to 1.38 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.

British Columbia wildfires and evacuations

For the reference month of September, the Monthly Wholesale Trade Survey added nine supplementary questions to assess the impact of the British Columbia wildfires and evacuations from July to September 2018.

For the September reference month, approximately 3,000 companies responded to the supplementary questions. Of these companies, 123 wholesalers (about 4%) indicated that their businesses had been affected by the wildfires at some point from July to September.

Responses that indicated an impact were recorded in each of the seven subsectors encompassed by the Monthly Wholesale Trade Survey and touched all provinces, with the exception of Newfoundland and Labrador and Prince Edward Island.

The most common type of impact felt during this time was disruptions in transportation. This included both receiving inventories and distributing goods to clients. Of the 123 wholesalers that indicated they experienced impacts, 7 stated that their businesses were shut down entirely and ranged from just days to multiple months.

While responses pointed toward a negative impact in most cases, five businesses stated increased sales.

Overall, while some businesses faced hardship from this extreme event, the impact of the wildfires on total wholesale sales in Canada was likely small.

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