Wholesale trade

Wholesale sales advanced 2.2% in October, mainly because of strong performances by the machinery and electronic equipment sector and the personal and household goods sector. During the month, wholesalers sold $40.6 billion worth of goods and services. Wholesale sales have been growing steadily since February 2005, except in July when they fell 1.7%.

In October, wholesalers increased their sales in six of the seven wholesale trade sectors. Only food, beverage and tobacco products registered a decrease, falling 1.8%. In fact, growth of 1.5% or more was posted by wholesalers in four sectors, led by gains of 12.8% in farm products, 6.2% in machinery, 5.4% in household products and 1.5% in automotive products. More moderate increases were observed in building materials (+0.1%) and "other products" (+0.6%). The latter category includes recycled metals, chemicals and seed.

From January to October, wholesale sales totalled $391.5 billion, up 5.7% from the same period last year. Since October 2003, total wholesale sales had generally been rising. Previously, they went through a period of declines that began in March 2003.

In constant prices, wholesale sales increased by 0.8% in October.

A sudden rise in sales of machinery and electronic equipment

Companies increased their purchases from machinery and electronic equipment wholesalers by 6.2% in October, the largest gain since September 2003, after cutting their spending in the previous three months. Even so, this strong increase was not enough to offset the previous three consecutive monthly declines. Two of the three groups included in this sector posted a gain in October.

Wholesale sales of machinery and equipment posted a robust 8.4% gain in October, ending a series of contractions that lasted four months. Despite the declines observed in previous months, sales of this group are at a historically high level. The survey of private and public investment in Canada (2005 Intentions) forecast a strong rebound in investment by companies engaged in industrial production (the production of mines, factories and utilities). The survey predicted a 15% increase in purchases of machinery and equipment for 2005.

For the first time in four months, wholesalers of computers and electronic products saw sales increase, climbing 8.1% in October. Nevertheless, this substantial gain was insufficient to offset the losses registered in previous months. Apart from the recent period of contraction, the sales of this group have generally been stable since November 2003. Lower sales of computers and other electronic components were offset in part by the growing popularity of cell phones. According to the most recent Survey of Household Spending, nearly 6 households in 10 (59%) reported owning at least one cell phone in 2004, compared to 54% in 2003.

Retailers' demand for personal and household goods rises sharply in October

Increases for all categories of wholesalers in the personal and household goods sector led to a 5.4% rise in sales in October. Apparel wholesalers, who account for approximately 15% of all sales in the sector, posted a second consecutive increase (+9.5%). These wholesalers led others in the sector in year-over-year growth; in October, their sales were 28.4% higher than in October 2004. Wholesale sales of apparel have followed an upward trend since the last quarter of 2004, after remaining essentially unchanged for the previous 12 months.

After posting a steep 6.9% decline in September, wholesalers of household products saw their sales rise a solid 5.1% in October. The sales of this group have generally been rising since mid-2003, owing in part to the booming real estate market.

Wholesale sales of pharmaceuticals posted a fourth increase in five months, advancing 4.3% in October. Nearly two-thirds of the revenues from the wholesale sale of pharmaceuticals come from sales to retailers. The sales of this group have grown steadily since the start of 2003. However, the average monthly growth, which was very robust in 2003, began to slow in 2004, partly because of an increased use of generic drugs, which have had a deflationary influence on the growth of prescription drug sales.

Cattle sales continue to grow

Wholesalers of farm products saw sales increase for a third consecutive month, rising 12.8% in October. As in previous months, the increase was largely attributable to cattle wholesalers, who saw their sales rise after the United States re-opened the border to Canadian beef on July 18. The discovery of one case of bovine spongiform encephalopathy (BSE) in the spring of 2003 had caused prices to fall sharply. The average price for 2004 remained 13.1% lower than in 2003. Since the border was re-opened, the price of cattle has strengthened somewhat.

Wholesalers of automotive products maintain their stride

Wholesale sales in the automotive sector rose 1.5% in October, owing to increased sales by wholesalers of motor vehicle (+1.8%) and parts and accessories (+0.3%). The increased demand for some popular makes contributed to the higher sales of motor vehicle wholesalers. These wholesalers had seen their sales surge by 15.7% in August, followed by a 1.5% increase in September. These recent gains pushed sales above the record level set in January 2003.

Higher sales in Central Canada and the Prairies

Wholesale sales increased in Central Canada in October, rising 1.7% in Quebec and 3.3% in Ontario. For Quebec wholesalers, this was a third consecutive month of growth. October's increase was mainly attributable to household goods and machinery and electronic equipment, which are both sectors that showed strong growth at the national level. In Ontario, the rebound was broad-based, with sales climbing by $646 million (+3.3%) to $20.4 billion.

The Prairie provinces also posted higher wholesale sales in October, with gains ranging from 1.8% in Alberta to 4.0% in Manitoba. Wholesalers on these Prairies mainly benefited from the increases in the farm products sector and the machinery and electronic equipment sector.

Inventories continue to rise

Inventories rose 0.7% in October, after climbing 1.7% in September. The increase in inventories was broad-based in October, with 11 of the 15 trade groups advancing. The trend in total inventories has generally been upward since November 2003.

The strong increase in sales, combined with a smaller increase in inventories, caused the inventory-to-sales ratio to decline to 1.20 from its September level of 1.22. The inventory-to-sales ratio is still relatively low by historical standards. Since October 2003, this ratio has been trending slightly downward after a rising period that began in December 2002.

Available on CANSIM: tables 081-0007 to 081-0010.

Definitions, data sources and methods: survey number 2401.

The October issue of Wholesale Trade (63-008-XIE, $15/$150) will be available shortly.

Wholesale trade estimates for November will be released January 21, 2006.

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 or data quality of this release, contact Jean Lebreux (613-951-4907; jean.lebreux@statcan.gc.ca), Distributive Trades Division.