Canadian Wholesale Trade Slightly Softer Than Expected in December
Canadian wholesale trade experienced a slight softening in the final month of 2023, according to data released by Statistics Canada. Despite this, the sector ended the year on a positive note, with sales seeing a rise, led by personal and household goods.
Wholesale Sales Rise, but Weaker Than Anticipated
On a seasonally adjusted basis, wholesale sales in Canada increased by 0.3% from the previous month, reaching 82.94 billion Canadian dollars ($61.60 billion), as reported by Statistics Canada. However, this figure fell short of the agency's initial estimate of an 0.8% rise in sales.
Sales Volume Up, Continuing the Positive Trend
In terms of sales volume, which takes into account price adjustments, December saw a 0.2% increase from the prior month, according to Statistics Canada. This positive trend in sales was observed with a 0.9% rise in sales in November, resulting in a nominal increase of 0.8% for the last quarter of 2023.
Wholesale Sales See Overall Increase for the Year
The wholesale sales sector experienced a 1.5% year-over-year increase, amounting to approximately C$986.9 billion. These wholesalers play a vital role in connecting farmers, manufacturers, and international suppliers with Canadian companies and public institutions.
Mixed Performance Among Wholesale Sectors
December saw three out of the seven wholesale sectors tracked by Statistics Canada report higher sales. The personal and household goods segment experienced a notable 4.1% increase, driven by pharmaceuticals, pharmacy supplies, as well as food, beverage, and tobacco sales. However, this growth was partially offset by a decrease in sales of motor vehicles, parts, and accessories.
Inventory Levels Rise in December
The value of wholesale inventories in December rose by 1.2% to reach C$129.51 billion, similar to levels seen earlier in 2023. The machinery, equipment, and supplies sector, along with the motor vehicle, parts, and accessories segment, contributed to this increase.
Wholesale Trade and Petroleum Sector Decline
Including sales by petroleum, oilseed, and grain merchants, overall wholesale trade in December experienced a 4.1% decrease from the previous month, reaching C$117.62 billion. However, inventories on the same basis increased by 0.7% to C$143.36 billion.
Manufacturing Sales and GDP Expectations
Earlier this week, Statistics Canada reported a 0.7% decline in manufacturing sales during December, primarily driven by a sharp drop in motor vehicle sales. The Bank of Canada anticipates a sluggish economy during the first half of this year, with a flash estimate pointing to GDP growth in December and a recovery for the economy in the final quarter of 2023 following a contraction in the previous quarter.
Future Data Releases
Retail sales data for December is set to be released by Statistics Canada, followed by official industry-level gross domestic product data at the end of the month.
Analyst comment
The news is neutral. The Canadian wholesale trade was slightly softer than expected in December. The market is expected to remain stable in the short term, with potential for growth in the retail sector and a recovery in the economy in the final quarter of 2023.
