Wholesale trade

Wholesalers posted a seventh consecutive monthly increase in their sales in December. Wholesale sales reached $36.1 billion, up 0.3% from November, following gains of 0.6% in November and 1.0% in October.

In constant dollars, sales rose 0.8% in December.

Wholesale sales increased in 7 of the 11 trade groups in December. The lumber and building materials industry recorded the greatest gain in terms of value, with sales up 3.2%. Sales in this industry rebounded vigorously in December, after dropping 2.1% in November. Other industries reporting increases in their sales were food products (+1.3%), the other products category (+1.5%) and household goods (+6.3%). The increased sales in these industries were offset in part by declines in the automobile sector (-2.0%) and computers and software (-1.3%).

Since November 2001, wholesale sales have posted an average monthly increase of 0.7%. Previously, wholesale sales were fairly lacklustre from the spring of 2000 to October 2001, with an average growth rate of 0.1%.

Wholesale sales grew in 2002

Wholesale sales were up 6.2% in 2002, compared with only 2.5% in 2001. Sales rose strongly despite signs of weakness in the US economy that persisted throughout the year. American wholesalers posted a gain of 1.5% in 2002.

Some types of wholesalers experienced relatively robust growth rates in 2002. The automotive (+15.2%), lumber and building materials (+14.7%) and household goods (+13.9%) sectors all posted strong gains.

In constant dollars, sales grew 4.9% in 2002.

Automotive sector sales rebounded in 2002

Despite a 2.0% drop in December, the automotive sector saw a spectacular rebound in 2002 as a whole, with sales climbing 15.2%. This sharp increase is in contrast with 2001, when sales fell 0.7%. Various manufacturers' incentives and lower interest rates helped boost motor vehicle sales to a record high in 2002, with 1.7 million vehicles sold in Canada. The strength of the Canadian economy, as shown by a robust labour market in 2002 (+560,000 jobs), may have encouraged many consumers to go ahead with a motor vehicle purchase or lease.

Housing market boom boosted wholesale sales in 2002 

In 2002, housing starts grew 25.9% (the strongest growth rate since 1983) and the home resale market increased 10.2%, according to the Canadian Real Estate Association. Since the lumber and building materials and household goods sectors are closely linked to the housing market, they profited from these increases.

Wholesale sales of household goods showed a strong upward trend throughout 2002, up a substantial 13.9% from 2001. This strong increase ended four years of weaker growth, when growth rates ranged from 2.1% to 5.1%.

Wholesale sales of lumber and building materials have also posted hefty gains (+14.7%) in 2002. This industry has generally posted robust growth since the last quarter of 2001, owing to the strong performance of the residential construction market.

Sales declined in 2002 in some sectors dependent on business investment

Sales of industrial machinery, equipment and supplies were down 3.2% from 2001. After a sharp increase in their sales in 2000 (+12.3%), wholesale sales in this sector slowed in the first quarter of 2001. The contraction in sales continued until May 2002; after that, this sector saw a very slight upward trend in its sales.

In addition, wholesale sales of computers and software declined for the third year in a row (-0.9%). After trending upwards from October 2001 to April 2002, sales have begun to show signs of weakness in recent months. Sales in this sector are down approximately 18% from their peak in August 1999.

Only two provinces and one territory experienced growth above the Canadian average in 2002

The Northwest Territories benefited the most from the growth in wholesale sales (+35.2%). The development of mining largely explains this growth.

British Columbia (+8.0%) and Ontario (+7.6%) also posted sales growth rates above the national average. The automotive sector and the lumber and building materials sector contributed to the good performance of these two provinces.

Quebec wholesalers saw their sales rise 6.1%, a rate slightly below the national average. Lumber and building materials, as well as food products accounted for much of the increase recorded in this province.

In 2002, the inventory-to-sales ratio fell to record lows on both sides of the border

After reaching a record low in April 2002 (1.24), the inventory-to-sales ratio has ranged from 1.25 to 1.27, and has stayed at 1.25 since October. This is well below the 1.33 average for 2001, despite successive increases in inventories recorded since March. In December, inventories grew 0.5%.

American wholesalers have also generally reduced their inventory-to-sales ratio. As a result, ratios on both sides of the border are now at record lows. Their ratio in December was 1.30 (excluding wholesale trade of oil seed and grain as well as petroleum products).

Available on CANSIM: tables 081-0001 and 081-0002.

Information on methods and data quality available in the Integrated Meta Data Base: survey number 2401.

The December 2002 issue of Wholesale trade (63-008-XIB, $14/$140) will be available soon. See How to order products.

Estimates for wholesale sales for January will be released March 20.

For general information or to order data, contact Client Services (1-877-421-3067 or 613-951-3549; wholesaleinfo@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Jean Lebreux (613-951-4907; jean.lebreux@statcan.gc.ca), Distributive Trades Division.