MNI DATA IMPACT:Record Canada Wholesales Not a Recovery Signal

Canadian wholesale sales rose to a fresh monthly record in September, though the gain doesn't suggest a broad economic recovery, the federal statistics office said Tuesday.

Sales rose 0.9% to CAD66.2 billion, greater than the receipts rung up in February before the pandemic hit. The gain also exceeded the 0.4% economist consensus.

Excluding the impact of price changes, sales volumes declined 0.2% on the month, Statistics Canada's report said. Year-to-date sales are also 3.3% below the 2019 mark, another sign of deeper damage from the pandemic.

"The strength in the wholesale sector does not reflect an economy-wide recovery from the pandemic. It is more likely the fact that the wholesale sector has been the beneficiary of decisions by Canadians to spend money differently than they have in the past (a substitution effect), and an increase in Canadians' disposable income," Statistics Canada's report said.

Household income in Canada rose the most among major nations in the second quarter on government payouts, according to OECD data.

Strength was again concentrated in essential goods like food and medicine in September, with respective gains of 4.2% and 7.2%. Auto and parts sales rose 1.1%, but were still 6% below where they were before the pandemic.

Inventories rose 0.7% to CAD90.7 in September, the second straight increase. The inventory to sales ratio was unchanged at 1.37, the lowest since August 2018.