Canadian Wholesale Sales Enter Longest Expansion Since 1995By
May sales increase of 0.9% beat economist forecast of 0.5%
Gains recorded in a majority of industries and provinces
Canadian wholesale sales rose for an eighth consecutive month to mark the longest continuous expansion in more than two decades, adding to the central bank’s view that a durable recovery is taking hold.
Sales rose 0.9 percent in May from the prior month, faster than the 0.5 percent growth predicted in a Bloomberg economist survey. It’s the last major release before a report on gross domestic product on Friday.
Canada has been on a roll this year as more companies ramp up production after recovering from an oil slump that started in 2014. Bank of Canada officials have cited confidence in the broadening rebound as part of the reason they raised interest rates on July 12, the first increase in seven years.
The figures are “a little bit of the flavor of the Canadian economy right now, it’s gaining momentum,” Nick Exarhos, an economist at CIBC World Markets, said by phone from Toronto. The wholesale report suggests the economy will show growth of 0.4 percent on Friday, and the central bank will probably boost interest rates again in October, he said.
The May wholesale report showed widespread momentum with gains in six of seven categories representing 80 percent of production. Eight of 10 provinces also reported increases.
Canada’s dollar strengthened to 80 U.S. cents, or C$1.2500 per U.S. dollar, for the first time since June 2015 on Monday morning.
Wholesale sales have climbed 10.1 percent from a year earlier. Machinery and equipment receipts advanced by 13.4 percent over that time and motor vehicles by 10.8 percent.
Wholesale companies are the intermediaries between producers of goods and retail stores or commercial buyers. The trade covers industries such as farm products, building materials and chemicals. Sales can be a signal of demand or price pressure in the economy.
The current run of monthly increases is the longest since an 11-month string that ended in January 1995. The dollar value of sales for May of C$61.6 billion ($49.3 billion) is a record high.
— With assistance by Erik Hertzberg