Canada Wholesale Revenues Rebound 0.9% in May - Modern Distribution Management

Canada Wholesale Revenues Rebound 0.9% in May

steep rise of motor vehicle sales. More than three-quarters of the sales of this group are concentrated in that province. Also, this group accounts for more than one-quarter of Ontario’s wholesale activities. Ontario wholesalers have generally posted rising sales since January 2005.


Second decrease in wholesale inventories in four months
Inventories declined 0.5% in May. A decrease in inventories was observed in 7 of the 15 trade groups. The steepest declines were in inventories of computers and other electronic products and motor vehicles. In value terms, the inventories of these sectors account for approximately 13% of total wholesale inventories. Despite May’s decrease, the trend in total inventories has generally been upward since November 2003.

Inventory-to-sales ratio down slightly
The increase in sales in May contributed to a slight decrease in the inventory-to-sales ratio, which edged down from 1.23 in April to 1.21 in May. The instability of sales in recent months has also led to some fluctuation in the ratio. The inventory-to-sales ratio is a key measure of the time (in months) that it would take to exhaust inventories at the current pace of sales.


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Release taken from Statistics Canada


Wholesale sales rebounded 0.9% in May to $41.8 billion, after declining 0.3% in April. While most of the seven wholesale trade sectors registered gains, more than half of the increase was attributable to higher sales in the automotive sector. Excluding the automotive sector, sales rose 0.5%. Since September 2003, total wholesale sales have generally been rising.


Wholesalers of automotive products (+2.3%) and building materials (+1.8%) were the main contributors to sales growth in May. Only the farm products sector registered a decrease (-7.8%).


In constant dollars, wholesale sales increased 1.8% in May.


Increased sales in the automotive sector bolster wholesale sales
After three consecutive months of declines, sales in the automotive products sector rose 2.3% in May. Wholesale sales of motor vehicle parts and accessories rebounded 3.9% in May after falling in March and April. Wholesalers in this industry, who sell mainly to retailers and dealers, have registered generally stable sales since March 2004.

Wholesale sales of motor vehicles increased 2.0% in May following a period of relatively lacklustre sales in the previous three months. Overall, motor vehicle wholesalers in May regained approximately half of the sales lost in the previous months. Weak exports during this period explain, in part, this group’s difficulties making up lost ground.


Building materials sector rebounds
Wholesale sales in the building materials sector increased 1.8% in May, after declining 1.3% in April. Two groups in this sector were behind the rise.

Metal products wholesalers (+5.0%) recorded a third consecutive increase in May. In recent months, this group has benefited from strong demand and improved market conditions. Steel prices continued to rise on uncertainties about availability. Steel-using sectors, such as non-residential construction, continued to post strong growth. According to the survey of investment in non-residential building construction, investment reached an all-time high for a 13th consecutive quarter between April and June, largely owing to huge gains in British Columbia and Alberta.


Wholesalers in the building materials group posted a 1.8% increase in May. This group continues to make a solid showing after an almost uninterrupted period of growth since the fall of 2003. Since the start of the year, this group has posted sales 12.1% higher than in the same period in 2005, partly owing to the renovation market.


Wholesale sales of lumber and millwork fell 1.8% in May, partly because of a decrease in exports with residential construction declining in the United States.


Farm products sector posts seventh straight decline
Farm products wholesalers posted a seventh straight decline in sales, falling 7.8% in May. Just as in previous months, the decrease was largely attributable to wholesalers of live animals. This period of decline coincides with a slowdown in live animal exports. In May, live animal exports fell 30.8%. Previously, wholesalers in this group strongly benefited from the United States reopening the border in July 2005 to cattle under 30 months of age.
Six provinces exceed national growth rate
Prince Edward Island wholesalers posted a strong sales increase (+9.3%) in May compared to the previous month. Robust growth in sales of food products, especially fish-related products, greatly contributed to the gain registered in that province. Newfoundland and Labrador (+4.1%), British Columbia (+2.5%) and Nova Scotia (+2.0%) also posted notable gains exceeding the national average of 0.6%.

In Ontario, wholesale sales grew 1.3% in May. This increase was attributable to the

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