Release Explanation: Measures the total value of sales at the wholesale level. A rising trend has a positive effect on the nation's currency because increased sales at the wholesale level are a good
indication that there is high consumer demand at the retail level.
Trade Desk Thoughts: According to Statistics Canada, wholesale sales declined 4.2% to $41.1 billion in current dollars in January. Lower activity in the automotive products sector was a major factor behind the decrease. Excluding the automotive products sector, wholesale sales fell 0.9%. In terms of the volume of sales, wholesale sales also fell 4.2%.
The decline in sales reflected both lower export demand for Canadian goods, a significant part of which flows through wholesale markets, and weaker sales in Canada. In January, four out of seven sectors, which accounted for about two-thirds of total wholesale sales, posted declines.
The largest decrease came from the automotive products sector, which fell 22.9% to $5.0 billion in January and accounted for approximately 80% of the total decline.
Sales of motor vehicles fell 30.0% to $3.4 billion, its lowest level since August 1996. Weakness in consumer demand in both Canada and the United States were the main contributors to the decline.
Other sectors that declined included the building materials sector (-6.2%) and the machinery and electronic equipment sector (-2.8%).
The largest increase in January occurred in the other products sector, which includes a wide range of wholesaling activity ranging from recycled metal, recycled paper and paperboard, stationery and office supplies, and other paper and disposable plastic products wholesalers, to agricultural feed and seed wholesalers and agricultural chemical and other farm supplies, chemical (except agricultural) and allied products, and all other wholesalers.
Sales in this sector increased 5.1% in January, following an 8.4% drop in December. The main contributors were increases by agricultural chemical and other farm supplies and seed wholesalers. This was the first increase in this sector since August 2008.
Forex Technical Reaction: The cad (USD/CAD) was just off its lowest level of the session as crude futures declined by 91 cents on the day.