Wholesale trade in Canada experienced a slight downturn in December 2024, marking a 0.2% decrease from the previous month, with sales dropping to $83.6 billion.
Three of the seven major subsectors reported declines in December, with machinery, equipment, and supplies witnessing the largest dip. The subsector fell by 2.1%, amounting to $17.7 billion in sales, while the building material and supplies subsector also experienced a downturn, dropping 2.8% to $11.8 billion. The machinery category was heavily impacted by a 4.2% decrease in the computer and communications equipment and supplies group, which was the most significant contributor to the overall slump.
While a decline in wholesale sales was evident across several areas, some subsectors saw growth. The motor vehicle and motor-vehicle parts and accessories subsector showed resilience, rising 1.4% to $14.3 billion.
Ontario, which accounts for over half of Canada’s total wholesale sales, led the decline at the provincial level. Wholesale sales in Ontario fell by 1.3% in December, reversing the gains made in previous months. A sharp drop in machinery, equipment, and supplies sales, down 4.4%, contributed to the province’s weaker performance.
In contrast, Quebec reported a positive performance, with wholesale sales increasing by 1.7% to $15.1 billion. The province saw significant growth in the motor vehicle subsector, where sales jumped 9.5%, alongside a 2.7% increase in personal and household goods.
Despite the decline, wholesale inventories in Canada grew by 0.6% in December, reaching $128.1 billion. The increase was largely driven by the building material and supplies subsector, which saw inventories rise by 2.8%. The growth in inventories suggests that businesses may be preparing for a stronger demand in the future, even if current sales figures are lower than expected.
The inventory-to-sales ratio edged up from 1.52 in November to 1.53 in December.
Looking at the broader annual picture, 2024 saw a modest 0.2% increase in total wholesale sales, totaling $994.5 billion for the year. The personal and household goods subsector led the charge with a robust 4.8% growth, largely fueled by increased pharmaceutical sales. However, the motor vehicle subsector, experienced a notable 2.8% decrease, reflecting a shift in consumer demand and industry trends.
While December’s data revealed challenges, the fourth quarter of 2024 painted a more optimistic picture, with wholesale sales up 1.6% from the previous quarter. The building material and supplies subsector was a major driver of this growth, supported by a 3.4% increase in sales. Year-over-year comparisons also showed a slight improvement, with a 1.0% increase in sales for the fourth quarter compared to the same period in 2023.
As Canadian businesses navigate a fluctuating economic landscape, the outlook for wholesale trade remains cautiously optimistic. Sales may continue to be volatile, but certain subsectors, particularly motor vehicles and personal goods, are showing resilience, providing a counterbalance to broader declines in machinery and building materials.
Looking ahead, it will be interesting to see how potential tariffs of 25% on Canadian goods could impact the wholesale trade sector in Canada. The effects of the tariffs could potentially alter future sales figures, and businesses will need to prepare for the possibility of a more challenging trade environment.