Wholesale trade

Wholesale sales increased 0.7% in July. During the month, wholesalers sold $34.8 billion worth of goods and services. Since November 2001, wholesale sales have generally followed an upward trend, after a relatively flat sales period from the spring of 2000 to October 2001.

Eight of the 11 sectors recorded an increase in July; the strongest, in terms of value, were in the computer and software sector (+5.7%) and the automotive sector (+1.6%). Noticeable gains were also recorded in apparel and dry goods (+1.7%) and in metals, hardware, plumbing and heating equipment and supplies (+1.3%).

July's advance was partly offset by drops in wholesale sales of industrial machinery (-0.9%), farm machinery (-3.6%) and beverage, drug and tobacco products (-0.4%).

In constant dollars, wholesale sales increased 1.6% in July.

Wholesale sales were up 4.9% from July 2001, compared with a 2.2% rise in the United States over the same period. Since the events of September 2001, Canadian wholesale sales increased 5.6%; US sales grew 2.4%.

Computer and electronic equipment sales up

Computer and electronic equipment sales jumped 5.7% in July, only partly offsetting the 6.2% drop in June. Since October 2001, this sector has been generally on the rise, but sales remained well below levels observed in the fourth quarter of 2000. After the increase in 2000, wholesale sales of electronic equipment weakened from January to September 2001.

Wholesale sales of motor vehicles and automotive parts also rose in July (+1.6%). After generally declining during the last half of 2000, wholesale sales regained some vitality in early 2001. This was followed by a slowdown in the summer and early fall, but wholesale sales of automotive products have since picked up, thanks to low interest rates and other manufacturers' incentives.

Housing market continues to stimulate wholesale sales

The performance of the housing sector, specifically reflected in healthy housing starts, resales and renovations, continued to stimulate wholesale sales. Wholesale sectors with strong ties to the housing market all saw an increase in July. The lumber and building materials sector and the household goods sector both grew 0.9%, and the metals, hardware, plumbing and heating equipment and supplies sector rose 1.3%. These three sectors have generally shown very strong growth since the fourth quarter of 2001.

The metals, hardware, plumbing and heating equipment and supplies sector seems to be the sector that has profited the most from the boom in housing and renovation, after a strong downward trend from December 1999 to October 2001.

Demand for farm and industrial machinery declines

Wholesale sales of farm machinery dropped 3.6% in July but remained 2.8% higher than in July 2001. After showing strong growth in early 2002, sales in this sector stayed relatively stable. For several years, however, this sector has seen considerable volatility in monthly sales.

Wholesalers specializing in industrial and other machinery, equipment and supplies recorded a 0.9% drop. Despite the good performance of the Canadian economy since October 2001, this sector continues to show a downward trend that began early in 2001.

Half the provinces contribute to the increase in wholesale sales

The increase in wholesale sales was felt in only five of the provinces. The most noteworthy gains were in Nova Scotia (+2.5%) and Newfoundland and Labrador (+2.1%). Good results in the wholesale sales of food products and motor vehicles, parts and accessories partly accounted for the increases in these provinces.

Although Ontario accounted for approximately 76% of all wholesale sales in automotive products, it contributed only one-quarter of the increase in this sector. It was mainly the other provinces that benefited from the rise in automotive products sales. The growth in wholesale sales in Ontario (+1.3%) was largely attributable to the lumber and building materials sector, as well as to the metals, hardware, plumbing and heating equipment and supplies sector, two sectors that depend on growth in the housing sector.

Strong drops were recorded in Saskatchewan (-3.8%) and New Brunswick (-2.4%). Saskatchewan's decline stemmed mainly from weak sales in farm machinery, whereas weak sales in food products contributed to the decline in New Brunswick.

Wholesalers continue to increase inventories

Wholesalers recorded a 1.0% increase in their inventories in July. Since the start of 2002 the trend has been generally upward, following a period in 2001 when wholesalers cut their inventories. With July's increase, wholesale inventories, in terms of value, returned to their January 2001 levels, a month in which wholesale inventories were at an all-time high.

The inventory-to-sales ratio, at 1.27, remained essentially unchanged from June. After reaching an all-time low in April (1.24), the ratio rebounded in recent months. Even so, the ratio continued to be well below the 1.33 average in 2001.

Available on CANSIM: tables 081-0001 and 081-0002.

Information on methods and data quality available in the Integrated Meta Data Base: survey number 2401.

The July 2002 issue of Wholesale trade (63-008-XIB, $14/$140) will be available soon.

Wholesale trade estimates for August will be released October 21.

For general information or to order data, contact Client Services (1-877-421-3067; 613-951-3549; wholesaleinfo@statcan.gc.ca). To enquire about concepts, methods or data quality of this release, contact Jean Lebreux (613-951-4907; jean.lebreux@statcan.gc.ca), Distributive Trades Division.