Canada wholesalers weak in Jan, lower growth seen

Mon Mar 19, 2012 10:50am EDT
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By Louise Egan

OTTAWA (Reuters) - Weakness in the auto sector unexpectedly dragged down Canadian wholesale trade in January, Statistics Canada said on Monday, adding to evidence of weak economic growth at the start of the year.

Wholesale trade fell 1 percent from December, offsetting the 1 percent gain made in the previous month, pulled down primarily by motor vehicles and parts as well as by agricultural supplies.

The decrease surprised market players who had forecast, on average, 0.3 percent sales growth in the month for wholesalers. In volume terms, which matters most for gross domestic product, sales were also down 1 percent.

"Taken together with the month's weak manufacturing shipments figure, January is shaping up to be a soft month," said Emanuella Enenajor, analyst at CIBC World Markets, in a note to clients.

The manufacturing sector's recovery faltered in January as factory sales slid 0.9 percent and exports fell after two months of gains.

"Although Thursday's retail print could point to healthy gains in that sector, we now expect January GDP to post at best a middling gain from the prior month," Enenajor said.

GDP grew a hefty 0.4 percent in December. January is seen growing at half that rate or less, and analysts said first-quarter annualized growth may come in lower than 2 percent.

Canada recovered from the 2008-09 recession more quickly than the United States and recovered all the jobs lost by early 2011. But the star performer in the G7 group of rich nations is slowing down this year and is set to underperform its neighbor and top trade partner.   Continued...