Wholesale trade

Wholesale sales edged down 0.2% in November, pulled down by a sharp drop in wholesale sales in the automotive sector.

Wholesale sales reached $40.5 billion in November. Excluding the automotive sector, sales rose 1.1%. Previously, wholesale sales had posted a sizable gain of 1.8% in October. Wholesale sales have generally been rising since the fall of 2003.

In November, sales dropped in three of the seven sectors, which accounted for 41% of total sales. The decreases were registered by automotive products (-5.0%), farm products (-6.9%) and machinery and electronic equipment (-0.7%). The largest increases were recorded in personal and household goods (+3.1%) and other products (+2.8%).

The drop in sales in the automotive sector especially affected Ontario, where much of this industry is concentrated. By contrast, most other provinces and territories did not record any decrease during the month.

In constant dollars, wholesale sales decreased 1.7% in November.

Sharply reduced demand from dealers

After three consecutive monthly increases, sales in the automotive products sector fell 5.0% in November. The drop was entirely attributable to the contraction of wholesale sales of motor vehicles (-7.5%).

According to the New Motor Vehicle Sales Survey, dealers saw their sales fall by 8.8% in August and 7.7% in September. While unit sales rose slightly in the months that followed, the steep declines in recent months have led to a build-up of dealers' inventories. Dealers wanting to reduce their inventories contributed to the sharp drop in wholesale sales of motor vehicles in November. Another factor contributing to the decrease was that some motor vehicle assembly plants temporarily shut down or cut back their operations in November, to reduce the quantity of some models found in their dealers' inventories.

For their part, wholesalers of motor vehicle parts posted a second consecutive gain in November (+5.8%). As a result of this gain, the sales of this group stood at $1.6 billion, surpassing the record level reached in March 2004. Wholesalers in this industry, who do not supply automakers but sell mainly to retailers and dealers, have registered generally rising sales since January 2004.

Farm products sector hit by drop in cattle exports

For the first time in four months, wholesale sales of farm products did not increase; instead, they fell 6.9% to $537 million. Just as in previous months, the monthly change is essentially attributable to wholesalers of live animals. A substantial proportion of their sales are destined for the export market, which fell sharply during the month. Livestock exports had strongly increased the level of live animal exports since the lifting, last July, of the US embargo on cattle under 30 months of age.

Wholesalers of personal and household goods posted strong sales before Christmas

Only one month before Christmas, retailers substantially increased their purchases from wholesalers in the personal and household goods sector (+3.1%). The increase was entirely attributable to the 8.0% rise in sales of household goods, which followed a similar 7.1% increase in October. The strong popularity of home entertainment equipment and the release of popular DVDs greatly contributed to the increase during the month. This group has generally posted rising sales since mid-2003, owing in part to a booming real estate market.

The other two groups included in the personal and household goods sector recorded slight decreases, with sales falling by 0.5% for apparel and 0.2% for pharmaceuticals. However, these two groups had registered strong increases in October.

Automotive sector pulls down Ontario

The drop in sales in the automotive sector especially affected Ontario, where more than 75% of the trade group is concentrated. Moreover, this sector accounts for more than one-quarter of Ontario's wholesale sales activity. Ontario wholesalers have nevertheless recorded generally rising sales since January of 2005.

In November, all three territories and six provinces posted higher wholesale sales. Yukon registered the strongest increase among the territories (+98.5%). Among the provinces, New Brunswick recorded the largest gain (+1.6%), followed by Alberta (+0.9%) and British Columbia (+0.8%).

A temporary shift of some wholesale activities from the Northwest Territories to the Yukon largely explains the growth registered by the latter territory. In New Brunswick, higher sales in the automotive sector and the food, beverages and tobacco products sector were behind the overall increase in wholesale sales.

In Alberta, wholesale sales posted a fourth consecutive advance led by numerous sectors, including personal and household goods and building materials. British Columbia wholesalers registered their third increase in four months, which was mainly attributable to the food, beverages and tobacco products sector and the personal and household goods sector.

Wholesale inventories register first decline in nine months

In November, wholesalers cut back their inventories for the first time in nine months (-0.4%). The decrease in inventories was general in November, with 12 of the 15 trade groups posting a decline. The trend in total inventories has generally been rising since November 2003.

The inventory-to-sales ratio was basically unchanged in November at 1.20. Since September 2004, this ratio has remained generally stable after a downward period that began in October 2003.

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

Definitions, data sources and methods: survey number 2401.

The November 2005 issue of Wholesale Trade (63-008-XIB, $15/$150) will be available shortly.

Wholesale trade estimates for December 2005 will be released February 17.

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.