Canada July wholesale trade beats forecasts with 0.3% rise

Canada's wholesale trade figures for July have been released.

• Monthly wholesale sales: +0.3%, compared with the -0.5% that had been anticipated. The prior month saw +2.8%.
• Year-over-year wholesale sales: +7.9%
• Monthly wholesale sales volumes: -0.6%
• Wholesale inventories: Roughly flat at C$140.6 billion
• Inventory-to-sales ratio: 1.51, versus 1.52 in June

According to Statistics Canada, wholesale sales in Canada edged up 0.3% to C$93.1 billion in July. That came in above the 0.5% drop that economists had forecast, even though the pace of growth was considerably slower than June's 2.8% advance.

Three of the seven subsectors posted gains. Building materials and supplies recorded the largest increase, climbing 3.5%, buoyed by a 10.3% jump at metal service centres. Food, beverage and tobacco sales rose 1.7%.

The underlying figures painted a more uneven picture than the top-line number. Once price changes are factored in, wholesale sales volumes fell 0.6%. This indicates that higher prices, particularly for steel, accounted for a portion of the rise in the dollar value of sales.

Immediate assessment: The headline came in better than predicted, which could offer some modest support for the Canadian dollar and typically push USDCAD lower. Still, the drop in sales volumes tempers that outcome, implying that underlying demand was not as robust as the headline suggests. Overall, this single report is not likely to significantly alter expectations regarding the Bank of Canada.

What the data covers: Wholesale sales measure the value of goods that Canadian wholesalers sell to retailers, businesses and other customers. Market participants watch the monthly release for signals about business demand, stock levels and future economic activity. The volume component adjusts for price movements, helping to show whether businesses actually moved more goods or just collected more revenue because prices rose.