According to Statistics Canada, Canadian wholesale trade grew more than expected in December, suggesting that the economy may be turning around. Wholesale trade jumped by 2.7 per cent during the month, beating analysts' expectations and recording the country's largest monthly gain since March 2004. A surge in motor vehicle sales (+ 7.3 per cent) can be attributed for the majority of December's gain. While eight of the provinces showed increases in wholesale trade, Alberta surprisingly experienced a decline (- 2.1 per cent), with lower sales of food and beverages. This is the second decline in total sales in three months for Alberta.
Inventories recorded their largest one month drop since May 2004, down 0.8 per cent to $53.4 billion. Declines were registered in nine out of 15 trade groups, accounting for around 80 per cent of inventories, with the largest declines coming in the motor vehicle and pharmaceutical trade groups. December's drop reverses a string of recent increases which, coupled with relatively stagnant sales, had pushed the inventory-to-shipment ratio to its highest level in over three years. Excessive product inventories are rarely a good thing as manufacturers and retailer usually have no choice other than to reduce the price of their products in order to clear out old stock, which translates into lower profits overall.
By 1 p.m. Monday the U.S. dollar was trading at 1.1638 against the Canadian dollar.
Market Report prepared by Bruce Hauser,
Accu-Rate Corp.
2573 Carling Ave. Ottawa, ON K2B 7H7
Tel: (613) 596-5505
E-mail:bruce@accu-rate.ca
