As the effect of the COVID-19 pandemic continued to spread throughout the economy, wholesale sales plummeted an unprecedented 21.6 per cent to $49.8 billion in April, the lowest level since July 2013, reported Statistics Canada on Thursday.
“All seven subsectors recorded lower sales for the first time since November 2008. In dollar terms, the motor vehicle and motor vehicle parts and accessories subsector contributed the most to the decline. Excluding this subsector, wholesale sales were down 14.2 per cent. Wholesale sales volumes dropped 21.5 per cent, a record monthly decline, to their lowest level since September 2009,” said the federal agency.
The motor vehicle and motor vehicle parts and accessories subsector recorded the largest dollar-value impact from the COVID-19 pandemic in April, down $5.4 billion, it said. Many of these companies noted that COVID-19 caused manufacturing stoppages, dealership closures and disruptions in consumer demand.
In Alberta, wholesale sales fell by 2.9 per cent month-over-month to $6.2 billion. They were down 17 per cent from a year ago.
“As the largest component of Canada’s service sector, wholesale trade impacts the whole economy, while acting as the “invisible” intermediary.
May marks the second month of widespread lockdown and it is anticipated that reported impacts on businesses for the month will not be as severe as seen in April,” said StatsCan.
“The motor vehicle industry faced another difficult month as the widespread global manufacturing shutdowns continued and production did not begin to resume until late May or early June. While Ontario dealerships were given the green light to reopen on May 4, by appointment only, market analysts anticipate another decline in May, but one that is far less pronounced than April’s record-setting drop.
“In addition, an increase in May employment for the wholesale and retail trade sector, as shown in the Labour Force Survey, and the appreciation of the Canadian dollar are providing some evidence that the Canadian economy may have started the slow road to recovery.”
Following the lead of the manufacturing data earlier in the week, wholesale trade in April fared worse than feared, said Royce Mendes, an economist with CIBC.
“As Statistics Canada says, the wholesale sector affects the whole economy, acting as an invisible intermediary. The more pronounced drop in these numbers, combined with the earlier released manufacturing and employment data for April, suggest that there’s some downside risk to Statistics Canada’s -11 per cent flash estimate of April GDP. That said, there’s still information to come in the form of tomorrow’s retail sales data.”
