Wholesale sales in current dollars edged up 0.2% in September, following a 1.5% decline in August.
Figures released this morning by Statistics Canada point to higher sales in the machinery and electronic equipment sector as factors, as well as the food, beverages and tobacco products sector, whose growth offset weaker sales in the automotive products sector. Sales excluding the automotive products sector rose 0.6%.
In volume terms, wholesale sales were up 0.3% in September.
Overall, four of the seven sectors, accounting for two-thirds of total wholesale sales, increased in September.
The largest increase came in the machinery and electronic equipment sector, which rose 1.2% in September. Following a 7.2% decline in August, the machinery and equipment trade group, which accounts for close to half of the total sector, rose 4.7%. This was the second increase in 10 months. The computer and other electronic equipment, and office and professional equipment trade groups both declined.
The food, beverage and tobacco products sector rose 1.0% in September, solely based on the strength of the food products trade group.
Sales in the automotive products sector fell 1.9% in September. A 2.0% drop in the sales of motor vehicles was behind most of the decrease. The decline in motor vehicle sales reflects weaker imports of trucks, which fell 31.5%, according to the latest international merchandise trade data. Motor vehicle parts and accessories fell 1.5%, posting its first decline in five months.
Elsewhere, foreign demand for Canadian securities was up strongly in September, as non-residents added $13.6 billion to their portfolios. The nation's number crunchers say this activity was largely comprised of significant acquisitions of Canadian stocks.
Foreign investors also continued to rebalance their holdings of Canadian debt in favour of longer-term securities, mainly in the federal government sector.
Canadian investors, in contrast, removed $4.8 billion from their holdings of foreign securities in September, mainly bonds. This was the largest monthly divestment since December 2008.
Foreign investment in Canadian equities reached $12.9 billion in September, the largest inflow since April 2004. Two-thirds of this activity was directed to new issues of Canadian shares. In September, outward direct investment activity picked up steam, resulting in Canadian firms issuing new shares to non-resident portfolio investors of acquired firms.
Lastly, StatsCan reported that the composite leading index increased 0.7% in October, its fourth straight advance. In October, the agency says, eight of the 10 components expanded, the same as in September. Housing remained the fastest-growing component. While the U.S. leading indicator continued to recover, this has been slow to translate into higher demand for factories in Canada.
The housing index rose 4.2%, its sixth straight increase. The initial upturn was led by existing home sales. While sales recently have slowed, housing starts have accelerated, up 4.8% in October.
The other components of consumer spending posted moderate growth of about 0.5%. For furniture and appliances, this represents their largest advance since September 2008. Outlays for other durable goods rose for the fourth month in a row, even before auto sales accelerated in October.
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