Wholesale trade

After a disappointing start to the year, wholesale sales rebounded 4.6% in March, reaching $37.6 billion. Apart from the increase registered in September 2003 (+6.1%) following the power blackout in August, this was the strongest gain in the past 10 years. Excluding the automotive sector, sales in March were up 3.3%.

Since February 2003, wholesale sales have generally been declining, with much of the decrease attributable to the automotive sector. Prior to this, wholesale sales went through a strong period of growth extending from the fall of 2001 to January 2003.

The increase in sales in March was mainly attributable to the automotive sector (+10.7%), lumber and building materials (+8.3%) and the other products category (+4.2%). The rise in wholesale sales was tempered by decreases in computers and electronics (-0.2%) and household goods (-0.4%).

First quarter sales were down 0.6% from the fourth quarter of 2003, a quarter that saw an increase of 2.8%. The contraction of quarterly sales was mainly attributable to the automotive sector, which despite a strong showing in March experienced a sharp drop in activity in the first two months of the year.

In constant prices, wholesale sales rose 4.4% in March. For the first quarter of 2004, they declined 1.3%.

March's increase in sales masks a disappointing quarter for the automotive sector

Despite the increase registered in March, sales in the automotive sector suffered the most during the first quarter of the year. They fell 8.6% compared with the fourth quarter of 2003, largely offsetting the gains (+9.1%) registered in the previous quarter. Compared to the first quarter of 2003, sales declined steeply (-13.1%). Sales in this sector began to show signs of weakness in February 2003, after an exceptional year in 2002.

Wholesale sales of lumber and building materials advanced 8.3% in March. This increase enabled the sector to make a strong showing for the first quarter, rising 3.9% compared with the fourth quarter of 2003. This gain is partly attributable to a rise in the prices of certain building materials and a booming housing market. The lumber and building materials sector has generally been booming since the fourth quarter of 2001.

Wholesalers of household goods register a fifth consecutive monthly decline

Wholesalers of household goods saw their sales fall 0.4% in March. This is the fifth consecutive decline. Compared with March 2003, the sales of this sector were down 4.6%. Nevertheless, since January 2003, wholesalers of household goods have seen their purchasing costs fall substantially as a result of the appreciation of the Canadian dollar. This has led to a reduction in their selling prices, coupled by an increase in their sales volumes.

Almost all provinces register an increase

In March, wholesale sales rose in nine provinces. The largest gains were reported in Prince Edward Island (+6.7%), Saskatchewan (+6.2%) and Quebec (+5.7%).

Wholesalers in both Prince Edward Island and Quebec benefited from increased sales in food products and the other products category. Saskatchewan wholesalers saw increases in the other products category (chemicals and other agricultural supplies) and the automotive sector.

Wholesale sales in Manitoba declined in March (-0.5%). Despite this decrease, sales made a strong showing in the first quarter, increasing 4.0% compared with the fourth quarter of 2003. This rebound in wholesale sales followed two especially difficult quarters. Compared with the same period in 2003, first quarter sales were up 3.1%.

Wholesalers build up their inventories

Wholesalers' inventories rose substantially in March (+1.0%) to $46.7 billion. This rise was largely attributable to the automotive sector and the metals and hardware sector. This increase follows a period of relative stability that began in early 2003. Prior to this, wholesalers had strongly increased their inventories in 2002.

Despite the rise in inventories, the much larger increase in sales caused the inventory-to-sales ratio to fall sharply, dropping from 1.29 in February to 1.24 in March.

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

Definitions, data sources and methods: survey number 2401.

The March 2004 issue of Wholesale Trade (63-008-XIB, $15/$150) will soon be available.

Wholesale trade estimates for April 2004 will be released on June 23.

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