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Analysis — November 2009
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Wholesale sales rose 2.5% to $42.4 billion in current dollars in November, the fifth increase in six months. During that period, Canadian wholesalers regained one-third of the losses incurred since the last peak in July 2008.
In volume terms, wholesale sales were up 2.1%.
November's solid growth was the result of widespread gains, with six of the seven sectors reporting increased sales.
The automotive products sector contributed the most to the rise in November, followed by the food, beverages and tobacco products sector. These two sectors accounted for more than two-thirds of the growth in wholesale sales.
Sales in the automotive products sector rose 7.8% in November to $7.3 billion, the eighth increase since the beginning of 2009.
In November, the automotive products sector benefited from strong sales in the motor vehicles trade group (+9.6%), reflecting the strength of Canadian imports.
According to the latest Canadian international merchandise trade release, Canadian imports of automotive products rose 9.4% in November, mainly due to increased imports of trucks and other motor vehicles (+30.1%).
The food, beverages and tobacco products sector (+2.5%) also contributed to the growth in wholesale sales. This increase was entirely attributable to the food products trade group (+2.9%).
Sales higher in eight provinces
Except for Nova Scotia and New Brunswick, all Canadian provinces posted increased wholesale sales in November. However, Ontario and Quebec were the main contributors to this growth.
Gains in the automotive products sector boosted sales, particularly in Ontario, where more than 70% of the sector is concentrated. This sector accounts for one-quarter of the province's wholesale sales.
Note to readers
All the data in this release are seasonally adjusted and in current dollars unless otherwise noted.
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.
Ontario wholesale sales climbed 3.5% to $21.7 billion, the highest level since September 2008.
Sales rose 1.6% in Quebec in November, after increasing 0.5% in October. The latest gain was largely attributable to higher sales in the food, beverages and tobacco products, and personal and household goods sectors.
Ninth straight decline in inventories
Wholesale inventories fell for a ninth straight month, down 0.2% to $53.8 billion in November. Inventories are now at their lowest level since July 2007.
Overall, 9 of the 15 wholesale trade groups reported lower inventory levels in November. The largest declines in dollar terms were in the inventories of the machinery and equipment (-1.5%) and the "other products" (-1.7%) trade groups. These decreases were partially offset by higher inventories in pharmaceuticals (+4.9%).
Inventory-to-sales ratio down sharply
Since March 2009, Canadian wholesalers have substantially reduced their inventories in response to weaker sales. This strategy has resulted in a sizable decrease in the inventory-to-sales ratio. This ratio fell from 1.44 in March to 1.27 in November, a comparable ratio to what was observed before the economic slowdown.
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.
