Canada's wholesale sales in May jump fastest in over a year

Sales in the wholesale sector of Canada jumped to over one-year high during the month of May, beating market expectations, buoyed by a strong demand for food and automobiles. The wholesale data brought in some respite for the Canadian economy after a series of global headwinds that twirled the country’ s non-energy exports.

Wholesale trade rose 1.8 percent to a seasonally adjusted CAD55.86 billion (USD42.78 billion) in May, data released by Statistics Canada showed Thursday. Expectations were for a more muted 0.2 percent gain, according to economists at Royal Bank of Canada.

In terms of volume, wholesale sales advanced 1.5 percent. Inventories dipped 0.1 percent to CAD71.98 billion. Further, motor vehicles and parts recorded the largest gain in dollar terms, climbing 3.6 percent to CAD10.75 billion. Excluding the auto sector, wholesale sales gained 1.4 percent to CAD45.10 billion.

In addition, sales of food increased 3.7 percent to CAD10.00 billion, while the personal and household goods sector recorded a 1.5 percent rise to CAD8.18 billion. Offsetting the largely broad-based advances was a 2.3 percent decline in the industrial machinery and equipment category, as weakness in the energy patch persisted.

The inventory-to-sales ratio, or the time in months required to eliminate stockpiles if sales were to remain at current levels, fell to 1.29 in May from 1.31 in April, data showed.

Meanwhile, in the Bank of Canada’s most recent released quarterly business outlook survey, firms indicated a cautious business plan with energy sector firms expecting further cuts. However, service sector firm seemed more optimistic over the future investment plans. The central bank expects the Canadian economy to decline 1 percent on an annualized basis for the April-to-June quarter, although it expects the economy to rebound in the second half of this year.