July 22, 2020

Canadian Wholesale Trade Rebounds 5.7% in May From Record April Low

Canadian wholesale sales rose 5.7 per cent to $52.6 billion in May, rebounding from a record-setting plunge in April as COVID-19 lockdowns ground factory activity to a halt.

Statistics Canada reported Friday that wholesale trade, which records sales of supplies to retailers, before they are resold to consumers, rose to an all-time high of $65.1 billion in January, before railway blockades walloped supplies in February, and COVID-19 lockdowns hit them again in March and beyond.

But activity seems to have bottomed out in April, with a plunge of 21 per cent to just under $50 billion. That was its lowest level since 2013. But in May the data agency says sales picked up in six of the seven subsectors it monitors. The lone exception was machinery equipment and supply, which fell again.

Most of May’s surge came from the motor vehicles and motor vehicle parts sector. “The sales pattern here largely reflects manufacturers being closed for all of April and parts of May — there was little inventory for most motor vehicle and motor vehicle parts wholesalers to sell,” Statscan said.

After losing two thirds of their sales in April, the motor vehicle and motor vehicle parts and accessories subsector rebounded by one third to $4.2 billion in May.

Another important sector was the food and beverage sector, which has come through COVID-19 comparatively better, since business at grocery stores has boomed throughout the pandemic as Canadians stay home and cook.

May’s restart means Canadian wholesalers have recovered about 18 per cent of what they lost to COVID-19 but they’re still 19 per cent below the high water mark they hit in January.

Sales were up in seven provinces, but Ontario and Quebec saw most of the gain.

While an encouraging sign, Scotiabank economist Derek Holt noted that the numbers show the economy has a long way to go to dig itself out of the COVID-19 hole.

“Almost all of that was through higher volumes with stable prices,” he said. “That’s a fairly mild rebound from the 21 per cent disaster during the prior month.”

(Source: CBC)