MNI DATA ANALYSIS:Canada Oct Wholesale Sales Beat Expectations>

--Total Wholesale Sales +1.5% Vs Sept -1.1%

By Yali N'Diaye

     OTTAWA (MNI) - Canadian wholesale sales topped expectations in 

October by a full point, as they increased 1.5% on the month to a record 

C$63.0 billion, data from Statistics Canada showed Wednesday. 

     Overall details were robust, although it remains to be seen how it 

all translated at the retail level when October retail sales are 

published Thursday. 

     Not only did the monthly gain beat analysts' expectations, more 

than offsetting the 1.1% drop the previous month, but it was on the back 

of upward revisions to September and August readings - albeit by a 

modest 0.1 percentage point each month - to -1.1% and +0.5%, 

respectively. 

     In addition, October's gains mostly resulted from stronger 

activity, as volumes, more relevant to real GDP, rose 1.2%, erasing the 

1.0% drop recorded the previous month. 

     Meanwhile, inventories rose 0.8%, bringing down the 

inventory-to-sales ratio to 1.30 in October from 1.31 in September. 

     Details of the report supported the Bank of Canada's scenario of a 

growth pick up in the fourth quarter, although this was just the first 

month. The central bank expects real GDP to expand at an annualized pace 

of 2.5% in the fourth quarter, after Statistics Canada reported a 1.7% 

gain in the third quarter, roughly in line with the BOC's 1.8% 

projection to be updated in January 2018. 

     The only weakness of the October report came from the auto sector, 

as sales of motor vehicles and parts fell 2.3%, more than erasing the 

2.0% gain in September, and recording their largest decrease since 

November 2016. 

     Excluding autos and parts, however, total sales rose 2.4% on the 

month, the largest increase since December 2014, lifting the 12-month 

growth rate to a double-digit 10.6% from 9.5% in September. 

     The October performance was due to stronger sales across all the 

remaining six subsectors, representing 81% of wholesale trade. 

     In particular, machinery, equipment and supply was up 5.2%, a 

positive signal for investment activity, one of the key pillars of the 

BOC's sustainable growth scenario. 

     The other large positive contribution came from personal and 

household goods, with sales up 3.4% on the month. 

     Regionally, gains were also widespread, with higher sales across 

nine provinces, led by Quebec, Saskatchewan, and Ontario. 

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

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