Analysts expected a minimal gain of 0.7%.
September 22, 2015
by The Canadian Press
OTTAWA — Canadian wholesale sales fell short of expectations in July as they held steady for the month at $55.4 billion, a hiccup among signs the economy is improving after a weak start to the year.
Economists had expected a gain of 0.7%, according to Thomson Reuters.
Statistics Canada said three subsectors posted gains, led by the machinery, equipment and supplies group, to offset losses in other sectors.
In volume terms, wholesale sales fell 0.4%.
“Still, despite the slight disappointment in today’s wholesaling data, the strong gain in manufacturing volumes reported last week, in addition to the healthy readings we expect from retailing to be released on Wednesday, still augur for a decent July GDP advance,” CIBC economist Nick Exarhos wrote in a brief note.
“That, in addition to the strong hand-off from the end of the second quarter, supports our view for a 2.7% growth pace in the third quarter.”
The machinery, equipment and supplies subsector gained 1% to $11.3 billion, its second consecutive increase, helped by the computer and communications equipment and supplies industry.
Wholesale sales in the motor vehicle and parts subsector rose 0.2% to $10.3 billion in July, while the miscellaneous subsector rose 0.3% to $7 billion.
The food, beverage and tobacco subsector had the largest decrease in dollar terms as it slipped 0.5% to $10.7 billion.
The weaker than expected wholesale sales results came as TD Bank downgraded its outlook for the economy this year to growth of 1.2% from its June forecast of 1.6%.
“Next year will see a return to growth of about two per cent, still about 0.3 percentage points lower than our June call,” TD said in a report.
“Exports are a key underpinning to this firmer economic backdrop, highlighting Canada’s increasing dependence on factors outside our borders to propel growth.”
TD predicted the Bank of Canada would keep its key interest rate at 0.5% until 2017.
In its latest monetary policy report, the Bank of Canada has forecast growth of 1.1% this year and 2.3% in 2016.
© 2015 The Canadian Press