Highlights

In September, wholesalers sold goods and services worth $36.6 billion, an increase of 6.1%. All trade groups posted an increase. However, only six of the nine trade groups that lost ground last month as a result of the blackout bounced back. Sales have been very volatile the last few months. Before this, sales had been generally trending downwards since the start of the year, after mainly rising from fall 2001 to January 2003.

In August, wholesalers saw their sales decline 4.1%. Ontario wholesalers bore the brunt of the decline, as a result of manufacturing production stoppages due to the blackout in Ontario and part of the United States. Ontario accounts for approximately half of Canadian wholesale sales. With their activities returning to normal in September, Ontario wholesalers posted an 8.7% increase in sales, which greatly contributed to the rise at the national level. Excluding Ontario, wholesale sales would have increased 3.6%.

All sectors benefited from the sales growth in September

The rise in wholesale sales was registered in all sectors. The most notable increase was in motor vehicles, parts and accessories (+22.3%).

Major increases were also experienced in other trade groups, such as metals and hardware (+6.1%) and lumber and building materials (+4.6%). The strong performance of the housing market - new home construction, home resale and renovation - continued to stimulate wholesale sales in these sectors.

In constant dollars, wholesale sales were up 6.0% in September.

Wholesale sales receive powerful boost as automobile production returns to normal

In September, wholesale sales in the automotive sector registered a very strong monthly advance (+22.3%). This rise ended a string of seven consecutive declines, the longest period of contraction ever recorded in this sector (since the beginning of the series in January 1981). September's advance was greater than the 15.3% drop recorded the previous month. In August, wholesale sales in this sector had been greatly affected by the halt in automobile production in Ontario and part of the United States. The return of US production to normal levels in September greatly influenced imports, which are the main source of supply for wholesalers. Imports rose 22.8% for passenger cars and 20.9% for trucks and other vehicles in September.

The sharp increase in sales in September, however, did not prevent wholesalers in the automotive sector from posting a third consecutive quarterly decline (-7.3%). The first and second quarters had seen declines of 1.7% and 7.1%, respectively. This sector is also the only one to have experienced negative growth for the first nine months of 2003 compared with the same period of 2002 (-1.9%). The 3.7% decrease in the number of new vehicles sold in Canada during this period contributed to these declines.

Total wholesale sales decline for a second consecutive quarter

Despite September's strong increase in total wholesale sales, third quarter sales saw a slight decline of 0.2%, following a 2.1% decrease in the second quarter. These two contractions were largely attributable to weak sales in the automotive sector.

However, quarterly sales in some sectors showed a solid performance. This was especially the case with lumber and building materials, which registered an increase of 8.0% in the third quarter. Higher prices for some materials and strong US and Canadian demand in the construction industry had a major effect on sales in this sector.

Sales of beverage, drug and tobacco products rose 5.4%, the third consecutive quarter of expansion. The increase may in part be explained by a rise in the price of various drugs, as well as the increase in exports of drugs by some pharmacies selling via the Internet.

All provinces posted an increase in September

All provinces experienced an increase in sales in September. The greatest advance was registered in Ontario (+8.7%), compared with the 7.5% drop in August. The strong presence of certain sectors in Ontario, such as the automotive sector, helped push up wholesale sales in that province. Similar to total wholesale sales, sales in Ontario have been volatile in recent months. Prior to this, sales had been generally falling since the start of the year.

Quebec (+4.8%) and Saskatchewan (+5.0%) also saw hefty increases in sales. Quebec showed strong sales of beverage, drug and tobacco products, as well as metals and hardware. For its part, Saskatchewan mainly benefited from increased sales in the "other products" category, which includes agricultural chemicals and other farm supplies.

Inventories up for a second consecutive month

In September, inventories registered an increase similar to the previous month (+0.5%). This rise is largely attributable to automotive wholesalers. Nevertheless, the sharp increase in sales contributed to a drop in the inventory-to-sales ratio, from 1.34 in August to 1.27 in September. Throughout 2001 to the end of the first quarter of 2002, the ratio had generally moved downward. It remained flat for the following three quarters and has been climbing since February 2003.