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Canadian wholesale sales rise less than forecast in June

H.S. Borji
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Canadian wholesale sales advanced at a slower rate than forecast in June, but the pace of growth during the second quarter suggests the economy was stronger following a disappointing start to the year.

Wholesale sales increased 0.6 percent in June to $53 billion, following an upwardly revised gain of 2.3 percent in May that was initially reported as 2.2 percent, Statistics Canada reported today in Ottawa. Economists forecast a gain of 1.3 percent.

Compared to June 2013, wholesale sales were up 8.7 percent.

Excluding motor vehicles and parts, sales were up 1.2 percent.

Sales volume, a figure used by economists to calculate gross domestic product, advanced 0.7 percent.

June marked the third consecutive month wholesale sales advanced. The subsectors that reported growth in June represented 69 percent of total wholesale sales, official data showed.

The miscellaneous subsector posted the largest gain in dollar terms, rising 3.1 percent or $208 million to $6.9 billion. This was the sixth time miscellaneous sales increased in the last seven months.

Building material and supplies sales increased for the sixth time in seven months. Sales in this category advanced 2.2 percent t0 $7.6 billion, the highest level on record.

Food, beverage and tobacco sales rose for the fourth time in five months at a rate of 1.5 percent. That brought the total to $10.4 billion in June.

Sales in the farm product subsector advanced 1.4 percent to $672 million, the sixth increase in the past seven months.

Following an impressive month of May, motor vehicle and parts sales declined 2.4 percent to $9.1 billion, official data showed.

On a regional level, wholesale sales increased in seven of the ten Canadian provinces, led by a 2 percent gain in Alberta. Sales in Ontario edged up 0.3 percent.

Sales declined 0.7 percent in British Columbia, following three consecutive monthly gains.

Inventories rose 1 percent to $65.9 billion in June, led by growth in six of the seven subsectors, which collectively accounted for 83 percent of all wholesale inventories.

The inventory-to-sales ratio, a measure of how long it takes to clear inventories at the current sales rate, was unchanged at 1.24.

Today’s sales figures suggest the Canadian economy rebounded steadily in the second quarter, following a disappointing first quarter that saw the economy expand just 1.2 percent annually.

Higher sales are an indicator of growth in retail trade and overall consumption, key elements of consumer spending. Statistics Canada on Friday will release June retail sales figures. Economists forecast retail revenues increased 0.3 percent in June, following a gain of 0.7 percent the previous month.

Canada’s economy advanced in May at the fastest pace in four months, climbing 0.4 percent. That marked the fifth consecutive month GDP growth was positive, a sign the economy was making progress.

StatsCan will release updated GDP figures for June next week.

The Canadian economy is expected to grow at an annualized rate of 2.5 percent in the April-to-June period, according to economists. Bank of Canada Governor Steven Poloz expects the economy to remain below full capacity until the middle of 2016.

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