Canadian Wholesale Trade Drops Unexpectedly in Part Due to Weaker Auto Sales
Canadian wholesale trade unexpectedly dropped by 0.4% to $50.5 billion in March, pulled down in part by weaker sales of motor vehicles, Statistics Canada data indicated on Tuesday.
Market operators had forecast a 0.4% increase after February’s 1.1% advance. Lower sales were recorded in three of the seven subsectors, which together accounted for 51% of wholesale sales.
In volume terms, wholesale sales were down 0.2%.
Year-over-year, wholesale sales are up 2.1% from March 2013.
The motor vehicle and parts subsector recorded the largest decline in March, falling 3.0% to $8.1 billion, the lowest level since September 2012. The motor vehicle industry (-4.4%) accounted for the decrease. Retail sales of motor vehicle and parts were flat in February.
Sales in the machinery, equipment and supplies subsector declined 1.4% to $10.6 billion, a third decrease in four months. The computer and communications equipment and supplies industry (-5.7%) accounted for most of the subsector's decline. Sales in this industry fell to the lowest level in nine months.
Lower sales were also recorded in the personal and household goods subsector, which fell 1.5% to $7.2 billion as a result of lower sales in five of its six industries.
The food, beverage and tobacco subsector rose 1.2% to $10.1 billion, the fifth increase in six months. All of the subsector's industries contributed to the gain, with the largest contribution coming from the food industry (+1.1%).
A fourth consecutive monthly increase was recorded in the miscellaneous subsector, which rose 1.7% to $6.7 billion in March. All but one of the subsector's industries contributed to the increase.
In March, sales rose 0.7% to $7.1 billion in the building material and supplies subsector, the third consecutive monthly increase. This month's level was the highest on record for the subsector.
In March, lower sales were recorded in five provinces, which together accounted for 60% of wholesale sales. Ontario was the largest contributor to the decline.
Inventories recorded a third consecutive gain in March, rising 2.3% to $64.1 billion, the highest level on record. Increases were recorded in five of seven subsectors, accounting for 91% of wholesale inventories.
The largest increases in dollar terms were in the motor vehicle and parts subsector (+6.9%) and the machinery, equipment and supplies subsector (+1.7%), the third consecutive gain for both subsectors.
The building material and supplies subsector (+2.8%), the personal and household goods subsector (+1.3%), and the miscellaneous subsector (+0.9%) all recorded their third gain in four months.
The inventory-to-sales ratio rose from 1.24 in February to 1.27 in March.
Source: Statistics Canada, Reuters
Latest U.S. Economic News
U.S. Housing Starts Up Sharply; Permits Highest Since 2008
U.S. housing starts jumped in April and building permits hit their highest level in nearly six years, offering hope that the troubled housing market could be stabilizing.
The Commerce Department said last Friday that groundbreaking increased 13.2% to a seasonally adjusted annual pace of 1.07 million units, the highest level since November 2013.
Starts rose by a revised 2.0% in March. They had previously been reported to have gained 2.8%.
Economists polled by Reuters had forecast starts rising to a 980,000-unit rate last month.
The U.S. housing market recovery has stalled as a combination of higher mortgage rates and rising property prices, against the backdrop of stagnant wage growth, makes housing less affordable for many Americans. A cold winter also weighed on activity.
The residential sector contracted in the first three months of 2014, declining for a second consecutive quarter.
With the multi-family sector segment continuing to drive residential construction, housing is unlikely to contribute to economic growth this year for the first time since 2010.
Last month, groundbreaking for single-family homes, the largest segment of the market, rose 0.8% to a 649,000-unit pace. Starts for the volatile multi-family homes segment surged 39.6% to a 423,000-unit rate.
Permits to build homes jumped 8.0% to a 1.08-million unit pace in April, the highest since June 2008. Economists had expected permits to rise to a 1.01-million unit pace.
Permits for single-family homes rose 0.3% to a 602,000-unit pace.
Single-family homes permits continue to lag groundbreaking, suggesting that single-family starts could decline in the months ahead to bring them in line with permits.
A survey from last Thursday showed confidence among single-family home builders slipped to a one-year low in May.
Permits for multi-family homes soared 19.5% to a 478,000-unit rate in April.
Source: Reuters
U.S. Consumer Sentiment Slips in May, Focus on Wages
A monthly gauge of U.S. consumer sentiment fell in May as a gloomy view on income growth clouded an otherwise positive economic outlook, a survey released last Friday showed.
The Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment came in at 81.8, down from 84.1 the month before.
It was also below the expectation of 84.5 among economists polled by Reuters.
“The main concern behind the small May loss involved dispiriting trends in wages,” survey director Richard Curtin said in a statement, as the median gain in household income for the next year was seen below inflation expectations.
However, Curtin said, “consumers judged the current state of the economy at the most favorable levels in ten years.”
Some 58%t of consumers reported that the U.S. economy had improved, up from 49% in April. The May proportion matched two readings from 2013 as the highest going back to 2004.
The survey’s barometer of current economic conditions fell to 95.1 from 98.7 and below a forecast of 99.0.
The gauge of consumer expectations slipped to 73.2 from 74.7 and fell short of an expected 75.0.
The survey’s one-year inflation expectation remained unchanged from last month at 3.2%, while the survey’s five-to-10-year inflation outlook dipped to 2.8% from 2.9%.
Source: Reuters
U.S. Consumer Prices Post Biggest Gain in 10 Months
U.S. consumer prices recorded their largest increase in 10 months in April, pointing to some inflation in the economy.
The Labor Department reported last Thursday that its Consumer Price Index increased 0.3% last month as food prices rose for a fourth consecutive month and the cost of gasoline surged.
That was the biggest rise since June last year and added to March's 0.2% rise.
In the 12 months through April, consumer prices rose 2.0% after gaining 1.5% in March. That was the biggest increase since July last year and in part reflected prices coming off last year's low base when energy costs decreased.
Economists polled by Reuters had forecast the CPI increasing 0.3% from March and gaining 2.0% from a year ago.
Stripping out food and energy prices, the so-called core CPI rose 0.2% after advancing by the same margin in March.
In the 12 months through April, the core CPI increased 1.8%. That was the biggest gain since August last year and followed a 1.7% rise in March.
Economists had forecast the core CPI rising only 0.1% from March and 1.7% from a year-ago.
The Federal Reserve targets 2% inflation and it tracks an index that is running even lower than the CPI. Policymakers worry that inflation is running too low, but the steady increase in prices should ease those concerns.
A report on Wednesday showed a strong rise in producer prices in April, with increases spread from goods to services, leaving economists to anticipate gains in consumer inflation in the months ahead.
Food prices rose 0.4% in April, rising by the same margin for a third consecutive month. A drought in the West pushed up prices for meat, dairy, fruit and vegetables. Poultry and fish prices also rose as did the cost of eggs.
Gasoline prices rose 2.3%, advancing for the first time since December. That rise offset a 2.6% plunge in electricity prices, which was the largest drop since 1986.
Within the core CPI, shelter costs increased 0.2%, slowing from the prior month's 0.3% rise. There were also increases in medical care costs, used cars and trucks prices and airline fares.
Source: Reuters
