Wholesale sales beat analysts’ expectations in June, increasing 1.3% to $55.3 billion, according to Statistics Canada data released August 20.
This could be an indication of a strengthening Canadian economy, according to CIBC World Markets Economics’ Nick Exarhos.
“Though manufacturing underwhelmed somewhat lofty expectations for the same month, wholesale trade did its part to suggest that June will be a strong month for GDP,” Exarhos said in a note to investors.
Exarhos said the gain was “four ticks stronger than the street had been expecting, with the prior month’s drop also revised a tick better (-0.9% vs -1.0% previously).”
Five of the seven subsectors saw improvements, with a 3.4% increase in the motor vehicle sector helping drive the overall gain.
Personal and household goods increased after two monthly declines, with a 2.2% jump bringing total sales to $7.8 billion – a record high in this sector. Pharmaceuticals and pharmacy supplies (up 3.8%) and toiletries, cosmetics and sundries (up 4.6%) were behind this growth.
Sales of machinery, equipment and supplies (up 1.3%) and food, beverage and tobacco (up 1.2%) also contributed to June’s gains.
Year-over-year, Canadian wholesale sales increased 3.6%.
Across British Columbia, wholesale sales contracted by -0.3% compared with the prior month. Year-over-year, however, trade has increased 1.6%.
The Canadian dollar has reacted positively to this morning’s news, increasing more than four-tenths of a cent to 76.36 cents U.S. as of press time.
Canadian retail data is scheduled to be released August 21, and Exarhos said a gain is expected. This information will provide another glimpse into how June GDP numbers will fare. The Canadian economy has contracted for five consecutive months, driven by drops in manufacturing, mining, quarrying and oil and gas extraction. June GDP numbers will be released September 1.
