Canada: Wholesale Trade Post a Surprising Gain in September

• Canadian wholesale sales rose a healthy 1.5% M/M in September, and in real terms it posted a 1.0% M/M gain. Excluding autos, wholesale sales rose 0.6% M/M.
• On a year ago basis, wholesale sales are still up 7.0%, while excluding autos, sales are up 9.6% Y/Y.
• A rebound in automotive products helped push the headline number higher in September.

The pace of wholesaling activity confounded expectations, and in September it posted a robust 1.5% M/M gain. This fully reverses the 1.5% M/M drop in August. In real terms, wholesale sales were up 1.0% M/M. The three month annualized trend in real shipments was up 0.4% in September, which follows a decline of 1.9% in August. By this metric, activity has clearly throttled back from the stellar pace in the early summer months. But with the monthly rise in September, wholesale sales are still up in seven of the last nine months.

Surprising resilience in automotive products drove the headline pace of wholesaling activity higher. Overall, sales of automotive products were up 6.0% M/M in September, thanks in large part to the 10.5% M/M gain in motor vehicle parts and accessories and the 4.7% M/M gain in the trade of motor vehicles. Other categories to post solid gains included building supplies, which was up 2.4% M/M and machinery and electronic equipment, which gained 1.6% M/M in September.

The fact that automotives drove wholesaling activity is certainly good news for Ontario, where worries about the long term health of the auto sector continue to weigh on the discourse about the provincial economy. Overall, the fact that wholesale trade posted a nice gain in September, and ends the quarter on a high note offers some support for third quarter GDP. However, the fourth quarter does not look so bright and so the disappointment in these data may still be forthcoming.

TD Bank Financial Group

The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.