OTTAWA (Reuters) - Higher sales of automotive products pushed Canadian wholesale trade up by 2.5 percent in November from October, a leap that far exceeded expectations and indicated the worst of the recession may be over.
The median forecast of analysts in a Reuters poll was for a 0.3 percent gain. October’s month-on-month gain was revised to 0.5 percent from the originally reported 0.3 percent.
The Canadian dollar firmed after the wholesale report on Thursday, and held steady as market players prepared to comb through the Bank of Canada’s detailed update on its view of the economy in its Monetary Policy Report, to be released later in the day.
On Tuesday, the bank tweaked its growth outlook as it pledged to keep interest rates at ultra-low levels until the end of June.
The wholesale trade figures were the latest in a series of data that shows the Canadian economy is gaining traction after crawling out of recession in the third quarter. They bode well for a rise in gross domestic product in the fourth quarter.
“Overall, this was a very strong report and it points to a significant pick-up in Canadian wholesale sales activity in November, which should to add quite favorably to Canadian GDP,” said Millan Mulraine, economics strategist at TD Securities.
Statistics Canada said the November increase was the fifth in six months, a period in which wholesalers have recouped one-third of the losses incurred since July 2008. In volume terms, November wholesale sales were up 2.1 percent.
The strength was broad-based as six of the seven sectors posted growth, led by the automotive sector.
Automotive products sales rose 7.8 percent, due largely to a 9.6 percent jump in the motor vehicles trade group. Statscan said this reflected the strength of Canadian imports.
Inventories fell for the ninth straight month, dropping 0.2 percent to their lowest level since July 2007. The ratio between inventory and sales dropped from 1.30 to 1.27, comparable to where it had been before the recession started.
Reporting by David Ljunggren in Ottawa and Ka Yan Ng in Toronto; Editing by Peter Galloway