Economy slowly growing: Wholesale sales register fifth hike in six months in June
Published Wednesday August 20th, 2008
Statistics Canada In New Brunswick, wholesale sales rose 4.1 per cent to $439 million from June 2007 to June 2008
TORONTO - The Canadian economy appears to be growing, but at a weak pace, after grinding to a halt earlier this year, with recent economic numbers suggesting things might not be as bleak as first thought.
Statistics Canada reported Tuesday wholesale sales were up two per cent to $45.2 billion in June, the fifth increase in six months. They were up 1.5 per cent in May and 1.6 per cent in April.
Craig Alexander, deputy chief economist at TD Bank Financial Group, called the increase "significant," noting they were still up a "solid" one per cent even after stripping out price effects.
Economic growth looks likely to come in at about 0.8 per cent on an annualized basis in the second quarter, he added, after contracting slightly during the first quarter.
In New Brunswick, wholesale sales rose 4.1 per cent to $439 million from June 2007 to June 2008, according to the latest Statistics Canada figures.
Provincially, the strongest sector fuelling the year-over-year increase was personal and household goods, which saw double-digit growth of over 10 per cent. Goods in this category include anything sold to households, such as appliances, jewelry, toiletries, or entertainment equipment.
New Brunswick also saw strong growth in the food sector, as well as other, a miscellaneous catch-all that includes agricultural supplies, recycled metal, paper and paper products, to name a few. Nationally, sales jumped five per cent over the same time period, to $45.1 billion.
Nationally, June's increase was largely a result of higher demand for automotive products, where wholesale sales were up 0.4 per cent, said Statistics Canada. Sales in the automotive products sector increased 10.6 per cent in June to $7.8 billion, after declines in five of the previous six months.
Six of the seven wholesale sectors reported higher sales in June, the only decline coming in the "other products" sector.
Alexander said numbers gauging the health of the economy had been mixed so far this year, with growth coming in at minus 0.3 per cent on an annualized basis in the first quarter, as the economy shrank.
Statistics Canada reported soft job numbers for July, losing 55,000 jobs during the month. But the most recent trade numbers showed a solid gain in exports and manufacturing shipments - and now the wholesale numbers for June appear solid.
"We probably will see the Canadian economy continue to struggle in the coming quarters," he said.
"It won't be until early 2009 that we finally start to see signs that it is regaining some momentum."
According to Statistics Canada, the country's trade surplus with the world expanded to $5.8 billion in June from $5.2 billion in May.
The view at TD Bank, said Alexander, is that given the data in hand, "real GDP in June is probably up about 0.2 per cent."
That would suggest "that economic growth in the second quarter is going to come in at about 0.8 per cent," he said.
"It's a very weak pace of economic growth," he said. "When the economy is healthy, it's growing at around 2.8 per cent."
The Canadian economy is being affected by the weakness in the United States, where the subprime mortgage fiasco has hit the housing market hard leading to thousands of layoffs, and cooling domestic demand in Canada.
Canada's export sensitive forestry and automotive manufacturing sectors have been savaged by the U.S. downturn, as well as losing their cost advantage because of the strong loonie, causing plants and mills to close.
"We've been seeing moderation on the housing front as consumer spending is coming down after an unsustainable rate of growth in prior quarters," said Alexander.
The wholesale trade numbers "no question they were good in June. But what it's really doing is it's helping to keep the economy's head above water, but only just."
The increase in wholesale sales in June in the automotive sector gave a boost to Ontario, where wholesale sales rose 4.2 per cent to $22.6 billion.
Alberta posted the only significant drop, falling 3.4 per cent in June.
All trade groups apart from building supplies reported higher inventory levels in June. Wholesale inventories rose 1.2 per cent to $55.5 billion.
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