Wholesalers are experiencing the fastest growth in 17 months, and the economy is rebounding.
Canadian wholesalers experienced a significant surge in sales during March, marking the fastest growth in over a year and signaling a potential rebound for the Canadian economy. Statistics Canada reported on Thursday that wholesale sales rose by 1.4 per cent during the month, surpassing economists’ expectations of a 0.9 per cent increase and representing the strongest growth since October 2017. This represents the fourth consecutive month of gains for the sector, further solidifying the indication that the Canadian economy is emerging from a period of relative weakness.
The robust performance of Canadian wholesalers provides key evidence alongside other positive data releases, including stronger trade, retail, and employment figures, to suggest that the Canadian economy is regaining momentum. The data indicates a trajectory toward increased rates of growth in the coming months, building on recent positive trends and offering a more optimistic outlook for the national economy. This latest wholesale print serves as a crucial final monthly data release ahead of Statistics Canada’s broader output numbers scheduled for release on May 31st.
Economists are now anticipating continued positive growth following a contraction in February, suggesting a return to faster growth rates. Alongside the wholesale sales figures, Statistics Canada will also release first-quarter Gross Domestic Product (GDP) numbers on the same day. These figures are expected to demonstrate a slight pickup in growth compared to the near-halt experienced in the final three months of 2018. This uptick in GDP growth would represent a crucial step in demonstrating the economy’s ability to regain its previous pace.
The gains in wholesale sales during March were remarkably broad-based, with six out of seven sectors reporting expansion on a month-over-month basis. The only exception to this positive trend was the motor vehicle and parts category, which experienced a decline. However, when excluding this automotive sector, wholesale sales increased by 2.2 per cent in March, highlighting the underlying strength of the broader sector. Key sectors driving this growth included building materials and supplies, which rose by 4.5 per cent, and machinery and equipment wholesalers, which recorded a 2.9 per cent gain. Furthermore, the increase in wholesale sales was underpinned by a 1 per cent rise in sales volumes – the strongest since May 2018. This volume growth, suggesting increased consumer demand and business activity, is a particularly encouraging indicator.
The strength of the wholesale data reinforces the emerging trend of a revitalizing Canadian economy. While further analysis will be required to confirm the sustainability of this recovery, the current indicators strongly suggest that the Canadian economy is poised for a period of renewed growth. This latest positive data release adds to the growing body of evidence supporting the prospect of a stronger economic performance in the months ahead.
