Analysis in Brief
Wholesale Trade: The Year 2015 in Review Analysis in Brief
Wholesale Trade: The Year 2015 in Review

Introduction

Wholesale trade in Canada rose for the sixth consecutive year in 2015, up 3.7%, the result of higher sales in all seven subsectors^Note 1. This measure of wholesale sales includes all industries within the wholesale trade sector as defined by the North American Industry Classification System (NAICS), with the exception of oilseed and grain merchant wholesalers (NAICS 41112), petroleum and petroleum products merchant wholesalers (NAICS 412), and business-to-business electronic markets, and agents and brokers (NAICS 419).

Wholesale sales volumes^Note 2 increased 1.6% in 2015, a slower rate than in 2014, when sales were up 5.8% in current dollars, and 4.0% in constant dollars.

The main contributor to higher wholesale sales in 2015 was the motor vehicle and parts subsector, which grew 7.4%. The gain in this subsector partly reflected higher exports of motor vehicles. Among the other top contributors were the food, beverage and tobacco subsector (+4.0%), the personal and household goods subsector (+5.4%) and the miscellaneous subsector (+5.9%).

In 2015, higher sales were recorded in nine provinces, together accounting for 88% of total wholesale sales. Ontario contributed the most to the increase in dollar terms, up 6.5% on the strength of widespread gains across subsectors, led by the motor vehicle and parts subsector. Alberta reported the sole provincial decline in 2015, ending five consecutive annual gains. The decline was led by lower sales in the machinery, equipment and supplies subsector, which reflected lower investment in the mining, quarrying, and oil and gas extraction sector.

The wholesale trade sector accounted for 5.8% of Canada’s real gross domestic product^Note 3 (GDP) in 2015. Between 2010 and 2015, this sector, as measured by GDP, grew at roughly twice the rate of the Canadian economy, making it the fastest growing of all major sectors during this period.

In terms of employment, the average number of employees^Note 4 in the wholesale trade sector increased 0.5% to 782,981 employees in 2015. Average weekly earnings (including overtime)^Note 5 of people employed by wholesalers grew 4.9% to an average of $1,164 per week in 2015. This was higher than 2014, when average wages grew 2.9% to $1,109 per week.

In the wholesale trade sector, Canadian business had 60,184 active locations with employees^Note 6 in 2015. Excluding the oilseed and grain industry, the petroleum and petroleum product subsector and the business-to-business electronic markets and agents and brokers subsector, there were 54,279 active locations with employees in the wholesale trade sector.

Labour productivity^Note 7, or output per hour worked, in the wholesale trade sector edged down 0.1% in 2015. Both the output (+0.7%) and hours worked (+0.8%) in the wholesale trade sector increased at a similar pace in 2015.

Wholesale trade sector in 2015

Annualized Monthly Wholesale Trade Survey (MWTS) data indicates that the wholesale trade sector expanded for the sixth consecutive year in 2015, up 3.7% to $653.7 billion, as a result of higher sales in all subsectors. After decreasing 6.9% in 2009, the largest annual decline on record for the series, wholesale sales recovered to their pre-recession peak^Note 8 in 2010. In 2015, wholesale sales were 26.2% higher than in 2007.

In volume terms, wholesale sales were up 1.6% to $589.4 billion in 2015. Still in 2015, the volume of wholesale sales was 13.8% higher than in 2007.

Higher sales in all subsectors

All subsectors recorded gains in 2015. The motor vehicle and parts subsector, the food, beverage and tobacco subsector, the personal and household goods subsector and the miscellaneous subsector, together accounting for 64% of total sales, contributed most to the gain.

Motor vehicle and parts led the growth in 2015

In 2015, the motor vehicle and parts subsector recorded the largest increase in sales, rising 7.4% to $118.7 billion. Excluding this subsector, wholesale sales rose 2.9% in 2015. The share of wholesale sales^Note 9 held by the motor vehicle and parts subsector has declined since 2005, decreasing from 19.5% in 2005 to a low of 15.3% in 2009, before rebounding to 18.2% in 2015.

Two of the three industries in the motor vehicle and parts subsector reported gains in 2015. The motor vehicle industry led the gain, increasing 8.5% to $88.7 billion, its sixth consecutive annual increase. The new motor vehicle parts and accessories industry grew 4.5% to $29.5 billion. The used motor vehicle parts and accessories industry declined 8.1% to $594 million in 2015.

Many wholesalers are involved in facilitating international trade by importing and exporting goods. In particular, a large number of motor vehicles and motor vehicle parts are imported and exported by Canadian wholesalers. In 2015, both exports (+17.2 %) and imports (+11.0%) of motor vehicles and parts increased. Retail sales by motor vehicle and parts dealers, and sales by motor vehicle assembly plants also recorded gains in 2015. Retail sales by motor vehicle and parts dealers recovered to their pre-recession high by 2011, while wholesale sales and imports of motor vehicle and parts recovered to their pre-recession peaks by 2012. In contrast, exports of motor vehicle and parts and manufacturing sales of motor vehicles did not recover to their pre-recession peaks until 2015.

Growth in the food, beverage and tobacco subsector

The food, beverage and tobacco subsector increased 4.0% to $125.7 billion in 2015. Two of the subsector’s three industries contributed to the gain, led by the food industry (+4.3%). The food, beverage and tobacco subsector accounted for 19.2% of total wholesale sales in 2015, up from 17.3% in 2008. In contrast to other subsectors, the food, beverage and tobacco subsector did not record a decrease in sales in either 2008 or 2009. The gain recorded by this subsector in 2009 was led by the food industry (+5.2%) and the cigarette and tobacco product industry (+22.7%).

Sales by supermarkets and other grocery (except convenience) retail stores (+1.4%) and food manufacturers (+2.9%), as well as imports (+13.0%) and exports (+15.0%) of food, beverage and tobacco products, all reported gains in 2015. As with sales by food industry wholesalers, these indicators (excluding exports) reported annual gains during the 2008/2009 recession. Increases in these indicators are closely tied to growth in the estimated Canadian population, which was up 1.2% in 2009.

The increase in the food industry is also partly reflected by higher food prices. The Industrial Product Price Index for meat, fish, and dairy products (+5.1%) recorded a gain in 2015. The Consumer Price Index for food also reported a gain, up 3.7% on an annual average basis in 2015. Depreciation of the Canadian dollar also contributed to higher food prices.

Miscellaneous subsector: agriculture supplies up, recyclable materials down

The miscellaneous subsector grew for the second time in four years, up 5.9% over 2014 to $84.0 billion in 2015. The subsector posted gains in four of its five industries, with the agricultural supplies industry leading the gain, advancing 15.2% to $25.6 billion. Wholesalers in this industry are involved in exporting fertilizers and other chemicals. In 2015, exports of fertilizer, pesticides and other chemical products increased 10.0%.

The recyclable material industry posted its third decline in four years, down 14.1% to $8.1 billion. This followed a 28.8% gain in 2014. The downward trend coincided with weaker exports of recyclable waste and scrap (-12.2%), and lower prices for scrap metal. Specifically, the Raw Material Price Index for waste and scrap of metal declined 10.1% in 2015.

Gains in other subsectors

Sales in the personal and household goods subsector increased 5.4% to $92.4 billion in 2015, its third consecutive annual gain. Higher sales were reported in all industries. The gain was mainly attributable to the pharmaceutical and pharmacy supplies industry, which increased 7.0% to $48.0 billion in 2015. This increase in wholesale sales was consistent with results at the retail level where, according to the Quarterly Retail Commodity Survey, sales of prescription drugs grew 3.5% on an annual basis in 2015, after rising 1.1% in 2014.

The building material and supplies subsector rose 0.5% to $90.7 billion in 2015. A gain in the lumber, millwork, hardware and other building supplies industry contributed the most to the increase, as the industry grew 7.0% to $44.5 billion in 2015. Related indicators including housing starts^Note 10 in Canada (+5.7%), and exports (+11.4 %) and imports (+6.3%) of building and packaging materials, also increased in 2015. Growth in the lumber, millwork, hardware and other building supplies industry was partially offset by the decline in the metal service centres industry, which was down 13.1% to $17.2 billion in 2015. The decline more than offset an 8.6% increase in 2014. The decrease was partly the result of lower metal prices, and a drop in capital spending in the oil and gas industry. The Raw Material Price Index for metal ores, concentrates and scrap fell 5.6% (a fourth consecutive annual decline), and capital spending^Note 11 on oil and gas and mineral exploration decreased 24.5% in 2015^Note 12.

The machinery equipment and supplies subsector, which represented the largest share (20.4%) of total wholesale sales in 2015, edged up 0.1% to $133.6 billion, its slowest annual growth rate in sales in six years. Gains in the computer and communications equipment and supplies industry (+3.0%) and the other machinery, equipment and supplies industry (+3.4 %) were partially offset by a decline in the construction, forestry, mining, and industrial machinery, equipment and supplies industry (-4.6%). This subsector is sensitive to changes in business investment, particularly investment in machinery. In 2015, capital spending in the mining, quarrying, and oil and gas extraction sector^Note 13 declined 31.4%, following a 7.8% increase in 2014.

The farm product subsector grew 2.7% to $8.6 billion in 2015, its third consecutive annual gain. This subsector recovered to its pre-recession peak in 2010. In 2015, sales in this subsector were 43.7% above the pre-recession peak of 2007.

Nine provinces posted gains in 2015

In 2015, wholesale sales increased in all provinces, with the exception of Alberta. Ontario was responsible for most of the national gain and half of total sales in 2015. Sales in Ontario increased 6.5% to $326.8 billion on the strength of widespread gains, led by the motor vehicle and parts subsector (+10.2%) and the personal and household goods subsector (+7.9%).

Wholesale sales in Quebec increased for the sixth consecutive year, up 3.1% to $118.6 billion. The machinery, equipment and supplies subsector (+7.4%) and the food, beverage and tobacco subsector (+4.7 %) led the gains.

Sales in British Columbia increased by 3.6% in 2015 to $62.5 billion, following a 6.2% gain in 2014. With the exception of the miscellaneous subsector, all subsectors posted higher sales, led by the food, beverage and tobacco subsector (+8.2%).

In 2015, sales in Saskatchewan increased 6.8% to $26.5 billion, and sales in Manitoba rose 1.3% to $17.3 billion. The agricultural supplies industry in the miscellaneous subsector led the gains in both provinces.

In the Atlantic Provinces, higher sales in the food, beverage and tobacco subsector led the gains in Nova Scotia, where sales increased 4.6% to $9.2 billion, and in Newfoundland and Labrador, where sales increased 2.9% to $5.2 billion. Higher sales in both New Brunswick, up 1.4% to $6.2 billion, and Prince Edward Island, up 2.0% to $701 million, were led by gains in the machinery, equipment and supplies subsector.

Following five consecutive annual gains, Alberta recorded the sole decline among the provinces in 2015, down 6.0% to $79.8 billion. The machinery, equipment and supplies subsector (-13.2%) was the largest contributor to the decline in the province in 2015, led by the construction, forestry, mining, and industrial machinery, equipment and supplies industry. The decline in this industry in Alberta coincided with a downturn in oil and gas prices starting in the fourth quarter of 2014. Capital spending in Alberta’s mining, quarrying, and oil and gas extraction sector fell in 2015, down 36.4%, following an 11.0% gain in 2014. The building materials and supplies subsector (-8.5%) and the motor vehicle and parts subsector (-12.8%) also contributed to the province’s decline.

Quarterly and monthly trends in wholesale in 2015

Growth in wholesale trade in 2015 was driven mainly by growth in the second quarter^Note 14 (+2.0%) and the fourth quarter (+1.1%). This contrasts with 2014, when all four quarters recorded growth. The gains in 2015 were partially offset by 0.6% decline in the first quarter. This decline in the first quarter was the result of a 2.7% drop in January, which was the largest monthly decline since January 2009.

The motor vehicle and parts subsector led the decline in the first quarter. Excluding this subsector, wholesale sales increased 0.3% in the first quarter. The decrease in this subsector was primarily the result of lower sales in the motor vehicle industry in January. The decline in this subsector coincided with closure of several automotive assembly plants for retooling and severe weather conditions which disrupted the flow of many goods.

Wholesale sales increased 2.0% in the second quarter of 2015, led by a gain in the motor vehicle and parts subsector (+11.6%). The motor vehicle industry, which recorded a notable gain in April (+14.3%), contributed the most to the subsector’s gain in the second quarter. Excluding this subsector, wholesale sales remained flat for the same period. In dollar terms, the miscellaneous subsector (-1.7%) recorded the largest decline, led by the agricultural supplies industry (-3.7%) and the recyclable material industry (-8.4%). These two industries recorded large declines in May, which drove the second quarter results. For the agricultural supplies industry this was the lowest level since November 2014, and for the recyclable material industry this was the lowest level since November 2013. Sales for the recyclable material industry declined for six consecutive months starting in December 2014, which partially reflected the falling oil prices, which began in late 2014.

Quarterly sales were up 0.3% in the third quarter of 2015. Higher sales were recorded in three of seven subsectors, led by higher sales in the food, beverage and tobacco subsector (+1.6%). The advance in this subsector was result of a new record level for sales in the food industry in September 2015. The miscellaneous subsector (+1.9%) also contributed to the growth in the third quarter, primarily the result of gains in the agricultural supplies industry (+6.5%).

Wholesale sale rose 1.1% in the fourth quarter, on the strength of higher sales in all subsectors. The building material and supplies subsector (+1.6%) and the miscellaneous subsector (+1.7%) led the gains in the fourth quarter of 2015. The building material and supplies subsector grew on the strength of higher sales in the electrical, plumbing, heating and air-conditioning equipment and supplies industry (+4.4%). This industry recorded notable gain in December 2015 (+11.2%), after reaching its highest level on record in December 2014 (+18.1%). In the miscellaneous industry, the agricultural supplies industry (+4.6%) and the other miscellaneous industry^Note 15 (+4.9%) led the gain. Both industries reported higher sales in November 2015. For the agricultural supplies industry, this was its highest level since December 2014, and for the other miscellaneous industry, it reached its highest level since October 2011.

Conclusion

Growth in wholesale sales in both current and constant dollars was slower in 2015 compared to that in 2014. A weak first quarter was offset by gains in the last three quarters of 2015. The motor vehicle and parts subsector, the food, beverage and tobacco subsector, the personal and household goods subsector and the miscellaneous subsector accounted for 64% of the overall increase in 2015. At the provincial level, Ontario posted the largest gain, led by the motor vehicle and parts subsector. In contrast, Alberta posted the sole provincial decrease in wholesale sales in 2015, led by a decline in the machinery equipment and supplies subsector. Declining oil prices in 2015 led to lower investments in the mining, quarrying, and oil and gas extraction sector, which contributed to the decline in wholesale sales for the machinery, equipment and supplies subsector.

Tables

Acknowledgements

This study couldn’t have been produced without the perseverance and professional contribution made by a number of people.

This study was prepared by Indermohan Saini under the responsibility of Elspeth Hazell, Rhonda Tsang, Marco Morin, Antoine Rose and the Director of the Manufacturing and Wholesale Trade Division, Jeffrey Smith.

Review Committee:
George Bentley, Guy Gellatly, Elspeth Hazell, André Loranger, Marco Morin, Daniela Ravindra, Antoine Rose, Jeffrey Smith and Rhonda Tsang of Statistics Canada.

In addition, the invaluable and professional contributions of Dissemination Division and Communications Division are gratefully acknowledged.

Citation

This article should be cited as follows in reference sections:
Saini, Indermohan. 2016. "Wholesale Trade: The Year 2015 in Review" Analysis in Brief. N^o. 99. Statistics Canada - catalogue n^o. 11-621-M. http://www.statcan.gc.ca/pub/11-621-m/11-621-m2016099-eng.htm, Ottawa.

When cited in footnotes, it should be as follows:
Saini, Indermohan, "Wholesale Trade: The Year 2015 in Review," Analysis in Brief, n^o. 99, September 2016, Statistics Canada catalogue n^o. 11-621-M, http://www.statcan.gc.ca/pub/11-621-m/11-621-m2016099-eng.htm, Ottawa

Notes