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* Motor vehicle shipments drag down wholesale sales
* Markets had expected a 0.4 percent increase
OTTAWA, May 20 (Reuters) - Canadian wholesale trade unexpectedly dropped by 0.4 percent 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 percent increase after February's 1.1 percent advance. Lower sales were recorded in three of the seven subsectors, which together accounted for 51 percent of wholesale sales.
The motor vehicle and parts subsector recorded the largest decline, falling 3.0 percent from February because of a 4.4 percent drop in shipments of motor vehicles.
Sales in the machinery, equipment and supplies subsector slipped by 1.4 percent, the third drop in four months, while the personal and household goods sector fell by 1.5 percent.
Inventories recorded a third successive gain, rising 2.3 percent to C$64.1 billion ($58.8 billion), the highest level on record. The previous high was the C$62.7 billion seen in February 2014.
Reporting by David Ljunggren; Editing by Chizu Nomiyama