MNI DATA ANALYSIS:Cdn Wholesale Sls -0.8%;Broad Based Weakness>

By Yali N'Diaye

     OTTAWA (MNI) - Canada wholesale sales unexpectedly contracted in 

June, posting a 0.8% decline on the month that brought down the 

year-over-year growth rate to 3.9% from 4.4% in May, data from Statics 

Canada showed Tuesday. 

     Details of the report were generally weak, especially considering 

the downward revision to May's growth estimate to 0.9% from 1.2%. May 

real sales growth was revised down to 0.9% from 1.3%. 

     --WIDESPREAD DECLINES 

     In nominal terms, declines were recorded across 5 of 7 subsectors, 

representing 71% of wholesale trade. Sales also fell across eight 

provinces, led by Alberta. 

     With sales down 1.9% following a 2.7% decrease in May, motor 

vehicles and parts were the largest downward contributor. 

     Sales excluding motor vehicles and parts were still down 0.5%, 

illustrating the widespread nature of the declines. 

     Motor vehicles and parts sales were down 3.6% in the second 

quarter, with volumes down 4.0%. 

     Personal and household goods (+0.1%) and building material and 

supplies (+0.4%) were the only two categories to record higher nominal 

sales. 

     --LOWER VOLUMES 

     The decline in June owed to lower volumes, as real sales dropped 

1.1% over the month, the largest decrease since February 2016, more than 

erasing May's advance. 

     In fact, even building material and supplies were down in volume 

terms, making it 6 of 7 subsectors recording lower real sales over the 

month. 

     Sales of machinery, equipment and supplies, an indicator of 

investment activity, contracted 0.6% in June, owing to a 0.7% decrease 

in volumes. During the second quarter, however, real sales in the 

subsector recorded a 2.3% gain. 

     --RECORD HIGH INVENTORIES 

     Inventories also sent a negative signal as they increased 1.8% to a 

record C$85.7 billion alongside lower sales. 

     As a result, the inventory-to-sales ratio rose to 1.36, its highest 

level since May 2009. 

     --2Q STILL GROWING 

     Still, for the second quarter as a whole, wholesale sales growth 

picked up to 1.0% from 0.6% in the first quarter. 

     In volume terms, more relevant to real GDP, sales growth remained 

steady at 0.7% in the second quarter. 

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

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