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Analysis — July 2009
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Wholesale sales increased for the second consecutive month in July, mainly as a result of higher sales in the automotive products sector. Sales in current dollars rose 2.8% to $41.7 billion.
In volume terms, wholesale sales were up 2.6% in July, their fourth consecutive monthly increase.
In July, five of the seven wholesale trade sectors had stronger sales, while the food, beverage and tobacco products and farm products sectors posted the only declines.
The largest increase was in the automotive products sector, which benefited from higher Canadian exports and imports of automotive products. Sales in the automotive products sector were up 14.2% to $6.8 billion in July, a sixth straight monthly advance. Despite this gain, sales in the automotive products sector remained 13.5% below their July 2008 level.
The building materials sector (+3.4%) also contributed to July's growth, as sales improved in all three of its components.
Note to readers
Wholesale sales in volume terms are calculated by deflating current dollar values using import and industry product price indexes. Since many of the goods sold by wholesalers are imported, fluctuations in the value of the Canadian dollar can have an important influence on the prices of goods bought and sold by wholesalers.
The wholesale sales series in chained (2002) dollars is a chained Fisher volume index with 2002 as the reference year.
The other substantial increase was in the "other products" sector (+3.1%), which posted its first gain in six months. The sector consists primarily of agricultural fertilizers and supplies, chemicals, recycled materials and paper products.
Increases in most provinces
Wholesale sales were up in eight provinces in July.
Fuelled by higher sales in the automotive products sector, sales in Ontario increased 4.3% to $20.9 billion in July. In Quebec (+2.9%), sales improved for the second time in three months, largely as a result of stronger sales in the building materials and machinery and electronic equipment sectors.
All of the Atlantic provinces except New Brunswick saw sales growth in July. Newfoundland and Labrador (+4.3%) benefited from increased sales in the machinery and electronic equipment sector to post its fifth gain since the beginning of the year.
In Western Canada, Saskatchewan (-4.6%) was the only province with lower wholesale sales in July. Sales in the province have fallen for six consecutive months.
Fifth straight decline in inventories
Wholesale inventories fell 0.5% to $56.3 billion in July, a fifth consecutive monthly decline.
Overall, 11 of the 15 wholesale trade groups reported lower inventory levels. The largest declines in dollar terms were in inventories of building supplies (-2.3%), metal products (-4.0%), office and professional equipment (-3.2%) and "other products" (-1.0%). These declines were partly offset by higher inventories in the pharmaceutical products (+3.2%) and the household and personal products (+1.6%) trade groups.
The decline in inventories, combined with the increase in sales, translated into a drop in the inventory-to-sales ratio from 1.40 in June to 1.35 in July.
The inventory-to-sales ratio is a measure of the time in months required to exhaust inventories if sales were to remain at their current level.
