Wholesale sales increase for the sixth time in seven months

Staff March 8, 2010

General

In December, wholesale sales in current dollars increased by 0.7% to $42.8 billion, the sixth increase in seven months.

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In volume terms, wholesale sales grew by 1.5%. The difference between the growth rate expressed in current and constant dollars is due to lower prices observed mainly in the automotive products and the machinery and electronic equipment sectors.
Widespread sales increases

December’s higher sales coincide with increases in six of the seven sectors. The only decrease was reported by wholesalers of personal and household goods, due to the decline in sales of pharmaceuticals.

The machinery and electronic equipment sector contributed the most to the growth in December. Sales in this sector climbed to $8.8 billion, up 1.2% from November. The increase can be explained by higher sales for all trade groups within this sector, that is, machinery and equipment (+1.3%), computer and other electronic equipment (+1.0%) and office and professional equipment (+1.2%).

The machinery and equipment group, whose sales depend largely on business investment, recorded three monthly increases in 2009. As a result, the sales reported in December were 18.8% lower than those in December 2008.

The second highest increase in December took place in the "other products" (+1.4%) sector, where sales rose for the fourth consecutive month. Despite positive performance in recent months, this sector’s sales are substantially below mid-2008 levels.

The "other products" sector mainly includes wholesalers of fertilizer and agricultural supplies, chemicals, recycled materials and paper products.

The building materials and automotive products sectors also made significant contributions to the growth seen in December, with increases of 1.3% and 0.9%, respectively.
Higher sales in six provinces

Wholesale sales rose in six provinces in December, with Alberta making the largest contribution to the national increase.

The growth in the machinery and electronic equipment sector boosted sales in Alberta. Sales for Alberta wholesalers rose by 3.9% to $4.9 billion. This was the third increase in sales in that province for 2009.

In British Columbia, wholesale sales grew by 1.9% in December, due in large part to the building materials and "other products" sectors.

In Quebec, sales edged up 0.5% after an increase of 1.6% in November. The December advance was mainly attributable to higher sales in the food, beverages and tobacco products and "other products" sectors.

Sales in Ontario (-0.2%) decreased slightly after posting consecutive increases in the previous three months.
Tenth straight decline in inventories

Wholesale inventories decreased for the tenth month in a row, declining 0.5% in December. Inventories, evaluated at $53.5 billion, were at their lowest level since December 2006.

Overall, 10 of the 15 wholesale trade groups reported reduced inventories in December.

The largest inventory declines in dollar terms were reported in the pharmaceuticals (-3.8%), building supplies (-1.6%) and computer and other electronic equipment (-5.5%) trade groups. These decreases were partially offset by an increase in inventories of "other products" (+3.5%).

Increased sales for wholesalers, combined with decreased inventories, led to a decline in the inventory-to-sales ratio, which fell from 1.27 in November to 1.25 in December. This compares with an inventory-to-sales ratio of 1.37 in December 2008.

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.