Analysis: Canada June Wholesale Sales -0.5% on Weak Volumes>

By Yali N'Diaye

     OTTAWA (MNI) - After eight consecutive months of increases, 

Canadian wholesale sales fell 0.5% in June to C$61.4 billion on 

widespread weakness, data from Statistics Canada showed Monday. 

     Sales volumes were down 0.7%, indicating the poor performance was 

all about weaker activity. 

     Both nominal and real sales posted their largest monthly declines 

since September 2016. 

     Sales were down for 73% of wholesale trade, led by food, beverage 

and tobacco as well as motor vehicles and parts, with both industries 

recording a 1.0% decrease from May. 

     Excluding autos and parts, wholesale sales were still down 0.4% on 

the month. Auto sales alone dropped 1.7% in June. Over the month, auto 

manufacturing sales, imports and exports all declined. 

     Among the four sectors posting a decline was machinery, equipment 

and supply, with sales contracting 0.6% after edging up 0.1% in May. 

That being said, machinery and equipment was up 5.1% in the second 

quarter after rising 4.7% in the first quarter. 

     Regionally, the weakness was also widespread with wholesale sales 

down in six provinces. 

     Meanwhile, inventories rose 0.6% in June, lifting the 

inventories-to-sales ratio to 1.30 in June from 1.28 in May. 

     Although there was little to cheer about in the monthly report, 

which was weaker than the 0.2% decline expected by the market consensus, 

it came after a long stretch of eight monthly gains, and still left 

nominal sales 8.8% higher than a year earlier, or 6.3% in real terms. 

     In addition, sales growth was revised up by 0.1 percentage point 

both in May and April to 1.0% and 0.9%, respectively. Sales volumes were 

also revised up. 

     As a result, the second quarter still posted a 2.5% gain after 

rising 3.9% in the first quarter. Real sales were up 1.7% in the second 

quarter after a 3.5% gain the previous three months. 

     The Bank of Canada is already factoring in a GDP growth moderation 

in months ahead following a strong first half of the year, which 

Monday's data supported by handing off a weak start to the third 

quarter. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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