MNI DATA ANALYSIS:Canada Dec Wholesale Sales Decline But 4Q Up

By Yali N'Diaye

     OTTAWA (MNI) - Canadian wholesale sales decreased 0.5% in December to

C$63.0 billion, more than erasing the 0.3% gain recorded in November, and

bringing down the 12-month growth rate to 7.7% from 10.5%, data from Statistics

Canada showed Tuesday.

     The weakness in December was reflected in the 0.9% drop in real sales, in

the widespread nature of the declines across five of seven subsectors

representing 65% of wholesale trade, as well as declines across six provinces.

     The weak performance was also reinforced by the 0.4-percentage point

downward revision to November's growth rate to 0.3%, while October's growth rate

was revised up just 0.1 point to 1.7%.

     Along with lower sales, inventories increased 1.7%, their largest gain

since January 2015, following a 0.7% decrease in November.

     As a result, the inventory-to-sales ratio rose to 1.31 in December from

1.29 in November.

     Despite the weak performance of the wholesale trade sector in December,

sales were still up 1.1% in the fourth quarter, with volumes up 0.7%, although

both marked a slowdown from the previous quarter.

     The wholesale trade sector should therefore bring a positive contribution

to the fourth quarter GDP.

     --WIDESPREAD DECLINES

     On a sector basis, sales decreased across five categories, led by personal

and household goods (-3.3%) and miscellaneous sales (-2.4%).

     Motor vehicles and parts were down 1.4% in December. Excluding the latter

category, sales were still down 0.4% on the month, erasing November's 0.3%

advance.

     Food, beverage and tobacco was down 1.4%, and farm product down 7.8%.

     --MACHINERY RECOVERS

     On the bright side, machinery, equipment and supplies sales increased 2.3%

on the month, offsetting November's 2.2% decline, a positive sign for investment

activity.

     For the fourth quarter, the category posted a gain of 3.5%.

     Building material and supplies was the other sector to record an increase

in December (+2.7%).

     --2017 STRONG OVERALL

     For 2017 as a whole, wholesale sales were up 9.4%, the largest annual

increase since 1997, to a record high level of C$741.1 billion, with gains in

all seven major subsectors.

     The robust 2017 performance owed to the strong showings in the first and

second quarters, when sales rose 3.9% and 2.5%, respectively.

     Sales volumes rose by a record 7.7% in 2017 to a record level of C$652.7

billion.

     Machinery, equipment and supplies rose 10.8%, and was the largest

contributor to higher sales in 2017. It accounted for 19.7% of wholesale trade.

     Higher sales of machinery, equipment, and supplies coincided with strong

business investment gains in the first half of the year.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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