Canadian Wholesale Trade update
Canadian wholesale trade reported the biggest losses in over a year in February, adding to the list of disappointing data releases for the month.
Ottawa – February’s wholesale trade dealt another blow to the upcoming monthly GDP data, falling the most since January 2015.
Sales plunged 2.2% to C$55.8 billion during the second month of the year, Statistics Canada said on Wednesday. The freshly released figures fell short of market expectations that estimated a marginal drop of 0.3%. In addition, the volumes were down 1.9%.
Meanwhile, the previous month’s data was revised to an increase of 0.2% from the initial flat reading.
The majority of the monthly losses originated from the machinery, equipment and supplies subsector, where sales tumbled 4.8%. Weakness was reported in construction, forestry, mining, and industrial machinery.
Autos and parts also declined, falling 3.5% and hitting the lowest dollar value in three months. The declines coincided with lower exports and imports within the auto industry as well. Other notable losses were posted in the miscellaneous, building material and supplies subsectors.
The most populated province of Ontario suffered the brunt of the declines, followed by Saskatchewan.
Meanwhile, wholesale inventories edged up 0.2% to C$73.2 billion and were once again led by the machinery, equipment and supplies subsector. The inventory-to-sales ratio, which measures the number of months it would take to run out of inventories with sales at their current level, climbed to 1.31 from 1.28.
So far, the macro data from February has been discouraging. Canadian manufacturing sales tumbled 3.3% to C$51.2 billion during the month – the biggest drop in over a year – mainly driven by sluggish sales of autos, petroleum and coal products.
Also, the trade deficit climbed C$1.9 billion in February, after exports dropped 5.4%, the most since May 2009, and imports fell 2.6%.
Traders will be playing close attention to the retail trade data scheduled to be released on Friday – the last significant release before the GDP publication.
Last Wednesday, the BoC kept its key interest rate at 0.5% while still sounding very dovish. The BoC highlighted that the fiscal stimulus announced by the Liberal government had a “notable positive impact on GDP”.
The new federal measures, which include investment as well as tax and transfer benefits, are estimated to add 0.5 percentage points to 2016 GDP and 0.6 percentage points to 2017 GDP.
The Bank also revised up its first-quarter growth projection to 2.8% from 1%, while downgrading the second quarter to 1% from 2.2%, highlighting that the strong figures in the beginning of the year are likely to be just temporary.
Without the federal stimulus, the BoC admitted that it would have been forced to downgrade its outlook. Some of the main problems still plaguing the Canadian economy include weak global growth and domestic uncertainty due to lower oil prices.
The story is collected from wbponline.com
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