Automotive Declines as August Wholesale Trade Drops for First Time in 5 Months

(The Canadian Press)


Five straight monthly increases for Canadian wholesale trade ended in August, yet another “disappointing” sign that economic activity in the country is weakening, one analyst said Monday.


Wholesale sales activity declined 1.5% to $45.7 billion, primarily due to a drop in sales in the automotive sector, Statistics Canada reported, while sales excluding the automotive products sector rose 0.5%. After removing the impact of price changes, sales in volume terms were down 3.3%.


“Overall, the report was disappointing in the sense that it suggests that wholesale sales activity may become a drag on the Canadian economy in (the third quarter),” Millan Mulraine, economics strategist at TD Securities, wrote in a note to clients. “Moreover, with the favourable support from auto-related sales appearing to have come to an end, we expect Canadian wholesale activity to remain sluggish in the coming months as the weakness in domestic and U.S. demand take hold.”


Sales of automotive products fell 11.7% in August to $7 billion, offsetting gains over the two previous months. A 13.2% decline in motor vehicle sales was behind most of the drop, while sales of motor vehicle parts and accessories fell 5.8%. Much of the decline in motor vehicle sales was due to slowing demand for larger less fuel-efficient vehicles – truck imports fell 29% in August to their lowest level in over four years.


The increase outside of the automotive sector was in large part due to higher sales in the food, beverage and tobacco products and “other products” sectors, both of which gained 2.2% in August. Other products consist primarily of sales of agricultural fertilizers and supplies, chemicals, recycled materials and paper products.


Ontario wholesale sales dropped 6.5% after posting five consecutive monthly increases. Nearly all other provinces reported higher sales in August, with B.C. coming in with a 5.5% increase in wholesale trade.

A link to the data files is on the StatCan Website.