Study: A review of wholesale trade

2005

In 2005, Canada's wholesale trade industry recorded its best performance of the past six years in constant dollars, with much of the impetus coming from the four westernmost provinces, according to a new study reviewing last year's wholesale performance.

Wholesalers, who are a key link between manufacturers and the marketplace, sold merchandise worth more than $470 billion last year, up 5.4% from 2004. However, when adjusted for inflation, the gain was 7.8%, indicating that last year's increase in value was mainly the result of higher volumes.

During the past three years, wholesale companies in Western Canada have experienced the strongest growth.

The study found that sales among wholesalers in Manitoba, Saskatchewan, Alberta and British Columbia have risen at an average annual rate of 9.1%. In 2005, wholesalers in these four provinces together accounted for 60% of the total increase in wholesale sales nationally.

Moreover, all three Prairie provinces recorded double-digit growth rates in wholesale sales last year.

The growth of wholesale sales in British Columbia has exceeded the Canadian average since 2002. In 2005, the province's wholesalers sold $47 billion worth of merchandise, a healthy 8.6% increase, compared with the national average of 5.4%.

Quebec wholesalers sold merchandise worth nearly $91 billion in 2005, a 5.7% increase, slightly higher than the national average.

In Ontario, a poor performance in the automotive sector put the brakes on wholesale growth in the province. Ontario's huge wholesale trade industry experienced a growth rate of only 2.2% in sales last year, less than half the rate of growth of 5.5% in 2004. Excluding the motor vehicle sector, wholesale sales in this province grew by 4.3%, getting closer to the national average.

Wholesalers in the Atlantic provinces recorded a decline in activity for the second year in a row in 2005, as sales rose in only Newfoundland and Labrador.

At the national level, the companies most responsible for last year's gain were those in the machinery and electronic equipment sector, which includes products such as heavy industrial equipment as well as computers and office and professional equipment. This sector represented barely one-fifth of all wholesale sales last year, but it accounted for nearly one-third of the year-over-year growth according to the results of the study.

For a second consecutive year, businesses made huge investments in machinery and electronic equipment. Wholesale sales in this sector exceeded $95 billion, up 8.6% from 2004 and well above the national average of 5.4%.

The study also showed that wholesalers in the building materials sector recorded sales of more than $66 billion last year, up 8.5% from 2004. However, this rate of growth was less than half the increase of 20.0% during the previous year.

Nevertheless, sales rose in all groups in the building materials sector in 2005.

Several key factors had an impact on the wholesale trade industry in 2005. They included notably lower prices on certain products resulting in part from the stronger Canadian dollar against the American greenback; increased investment by business; the reopening of the American border on July 18 to trade of live cattle under 30 months of age; the decline in residential housing starts in Canada; and China's growing role in the world economy either for exports of Canadians goods and imports of Chinese products.

The study also notes that the wholesale trade industry makes a substantial contribution to the Canadian economy. On average, it employed more than 739,000 Canadians in 2005, and it accounted for over 6.4% of Canada's economic output as measured by gross domestic product.

Definitions, data sources and methods: survey number 2401.

The analytical article "Between the producer and retailer: A review of wholesale trade for 2005" (11-621-MIE2006040, free) is now available online in the Analysis in Brief series.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Jean Lebreux (613-951-4907), Distributive Trades Division.