The value of Canadian wholesale trade unexpectedly slipped 0.1 per cent to $44.1 billion in May from the month before, due to a steep drop in sales of farm supplies, Statistics Canada said July 21.
Market analysts had predicted a 0.5 per cent rise in May. StatsCan revised April’s decline to 0.2 per cent from an initial 0.3 per cent fall.
The agricultural supplies industry fell 29.5 per cent, as wet weather in Western Canada led to lower demand for fertilizer and seeds. Farm supplies fall under the “miscellaneous” wholesale category, which was the only sector out of seven to report a decline in the month.
Saskatchewan had the steepest decline among the six provinces that reported a downturn in sales, StatsCan said. It was the Prairie province’s biggest decline in wholesale sales since March 2005.
Earlier this month, the federal Agriculture Department lowered its forecasts for the acreage that farmers will harvest this autumn, as well as the size of their crops, after record spring rains flooded Prairie fields, drowning out young crops or preventing planting altogether.
Excluding the decline in agricultural supplies, wholesale sales activity was up 0.9 per cent.
The Bank of Canada highlighted on Tuesday, after it raised interest rates for a second time in two months, that business investment has not bounced back after shrinking during the recession.
“The decline in sales volumes will act like a piece of dead weight attached to next week’s GDP report,” said Stewart Hall, an economist at HSBC Securities.
Statistics Canada releases May GDP figures July 30.