After seven consecutive months of gains, wholesale sales in Canada fell by 1.3% to a total of $66.5 billion in December. The decline was largely the result of significantly lower sales of motor vehicles and motor vehicle parts, and machinery, equipment and supplies. However, despite the decline, December’s sales were the third highest on record, and exceeded pre-pandemic levels by 3%.
According to Statistics Canada, the country’s three biggest wholesale subsectors all suffered subdued sales in December. The motor vehicle and motor vehicle parts and accessories subsector recorded the largest decline, as sales fell by 4.3% to a total of $10.7 billion in December— the lowest level since July. Sales of machinery, equipment and supplies decreased by 3.1% to a total of $13.8 billion. Meanwhile, food, beverage and tobacco sales fell by 1.3% to $12 billion in December, largely due to a 15.4% drop in the sale of cigarettes and tobacco products.
Sales levels for the month of December decreased in seven of the ten provinces, with Ontario and British Columbia posting the largest declines. In the meantime, overall inventory levels for December slid by 0.1% to a total of $90 billion; however, the building material and supplies subsector offset most of the declines, after posting an increase of 2.4%, totalling $14.5 billion. The inventories-to-sales ratio, which measures the number of months it would take to exhaust inventory levels, increased from 1.34 to 1.35 in December.
Annually, Canada’s wholesale sector suffered its first decline since 2009, contracting by 1% to a total of $754 billion as a result of the Covid-19 pandemic. However, even with the decline, wholesale sales rose in five of the seven categories, with the food, beverage and tobacco subsector leading the gains with an increase of 3.5%. Conversely, the gains were offset by declines in the motor vehicle and motor vehicle parts and accessories subsector, which suffered numerous supply chain disruptions throughout the pandemic.
The building materials and supplies subsector posted an increase of 1.7% in 2020, largely due to a strong demand for construction materials amid a historic real estate boom throughout the duration of the pandemic. In fact, the demand for new housing and home renovations has been so pronounced in Canada and the US, that exports of lumber and other wood products soared by 22.2% last year.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
