MRO Magazine

Higher prices of imports keeps wholesale sales in check

Ottawa, ON -- Statistics Canada reports that wholesale sales edged down 0.1% to $44.1 billion in May 2010. Des...


Ottawa, ON — Statistics Canada reports that wholesale sales edged down 0.1% to $44.1 billion in May 2010. Despite increases in six of the seven subsectors, sales fell because of a sharp decline in the agricultural supplies industry.

In volume terms, wholesale sales were down 1.5% in May.

The substantial decrease in the volume of sales compared with the decline in the current dollar value of sales in May primarily reflects higher prices for the imported products sold by wholesalers. This was partly attributable to the depreciation of the Canadian dollar relative to the American dollar during the month.

Sales of the agricultural supplies industry fell a substantial 29.5% in May. Poor weather in Western Canada resulted in lower farm demand for fertilizer and seeds.

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The slump in the agricultural supplies industry’s sales is the main reason for the slower sales of wholesalers in the miscellaneous subsector, the only subsector that was down in May.

The other six wholesale subsectors posted gains. The largest increases in dollar terms were in the machinery, equipment and supplies subsector and the food, beverage and tobacco subsector.

Sales in the machinery, equipment and supplies subsector rose 1.9% to $9.1 billion in May, their highest level since January 2009. There were gains in three of the subsector’s four industries. This coincides with a rise in the volume of machinery and equipment imports.

The food, beverage and tobacco subsector (+1.3%) posted its seventh consecutive increase, as a result of a 1.7% sales increase in the food industry.
Wholesale sales were down on the Prairies in May

Sales were down in six provinces in May. A major part of the downturn was in the Prairie provinces.

Saskatchewan (-12.3%) had the steepest decline in Canada, primarily because of weaker sales in the agricultural supplies industry. This was the province’s largest decline in wholesale sales since March 2005.

The decrease in the agricultural supplies industry also affected Manitoba (-9.1%) and Alberta (-0.7%). Manitoba’s decline was its largest in seven years.

In Ontario, sales rose slightly (+0.4%) in May, the fourth increase since the beginning of the year. In Quebec, sales edged down 0.2% in May, following a 2.3% advance in April.
Inventories grow for the third time in four months

Wholesale trade inventories climbed 1.7% to $52.4 billion in May. This was the largest increase since January 2007.

Overall, 16 of the 25 wholesale trade industries reported higher inventory levels.

Wholesalers in construction, forestry, mining, and industrial machinery, equipment and supplies industry posted the biggest inventory gains in dollar terms, followed by agricultural supplies wholesalers.

The growth in inventories, combined with the slight decline in sales, translated into an increase in the inventory-to-sales ratio from 1.17 in April to 1.19 in May.

The inventory-to-sales ratio is a measure of the time, in months, required to exhaust inventories if sales were to remain at their current level.

Wholesale trade data for June will be released on August 19, 2010.