MNI DATA ANALYSIS: Autos Boost Canada March Wholesale Sales>

By Yali N'Diaye

     OTTAWA (MNI) - Canada wholesale sales rebounded 1.1% in March, 

topping market expectations as they benefitted from a strong auto 

performance, data from Statistics Canada showed Tuesday. 

     The upside surprise was reinforced by upward revisions to February 

and January's readings, with estimates now at -0.4% (versus -0.8%) in 

February and +0.5% versus +0.3% initially reported in January. 

     The overall picture was nonetheless consistent with a GDP growth 

slowdown in the first quarter, when sales rose 0.5% after a 1.4% gain in 

the first quarter. Real sales growth also slowed to 0.4% from 1.5%. 

Excluding autos and parts, sales rose 1.0% in the first quarter and 1.8% 

the previous three months.  

     The first quarter growth slowdown has already been factored in by 

the Bank of Canada, which revised its real GDP annualized growth 

estimate to 1.3% from 2.5%. It projects a rebound to 2.5% in the second 

quarter, and on that front the stronger-than-expected wholesale sales 

performance in March is handing off a strong start that supports the 

central bank's scenario. 

     --SALES CONCENTRATED IN AUTOS 

     While the headline number beat market expectations, March sales 

were concentrated in four of seven subsectors representing less than 

half (49%) of wholesale trade. 

     One sector in particular, autos and parts, did the heavy lifting, 

with a 5.0% monthly gain, the largest since January 2017, explaining 0.9 

points of March's 1.1% sales growth. 

     Excluding autos and parts, sales indeed expanded by just 0.2% on 

the month, more than erasing February's 0.1% decrease. 

     Farm products, personal and household goods, and building material 

and supplies also posted gains in March. 

     Regionally, sales were also concentrated, as they increased in just 

two provinces, led by Ontario, where they increased 2.5%, the largest 

gain since January 2017. 

     --MACHINERY, EQUIPMENT DOWN 

     Among the sectors recording lower sales, machinery, equipment and 

supplies was down 0.5%, more than offsetting the previous month increase 

of 0.4%, sending a negative signal for investment activity in Canada. 

     Over the first quarter, sales of machinery, equipment and supplies 

still managed to increase 1.8% from the fourth quarter 2017, although 

this marked a slowdown from 3.2%. 

     Food, beverage and tobacco (-1.4%) and miscellaneous sales (-0.6%) 

also contracted during the month. 

     --INVENTORIES DECLINE FURTHER 

     Meanwhile, inventories edged down 0.1% in March after declining 

1.0% in February, which was sharply revised down from being initially 

reported as flat. 

     The inventory-to-sales ratio decreased to 1.31 from 1.33, its 

lowest level since November last year. 

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

[TOPICS: MACDS$,M$C$$$]