Wholesale sales rose 0.5% to $83.8 billion in November. Higher sales were posted in the motor vehicle and motor vehicle parts and accessories subsector and the machinery, equipment and supplies subsector, while sales in remaining subsectors decreased. Constant dollar sales rose 0.1% in November. Inventories fell 0.5% to $126.0 billion in November, the first drop since January 2022. Lower inventories were reported in four of the seven subsectors, led by the building material and supplies subsector and the personal and household goods subsector. Meanwhile, the remaining three subsectors saw growth in inventories, led by the machinery, equipment, and supplies subsector.
Commentary: According to Statistics Canada, inventories in the building material and supplies subsector fell 3.3% to $23.8 billion in November. This decrease was driven by all three industries: electrical, plumbing, heating and air-conditioning equipment and supplies (-4.2% to $6.9 billion), metal service centres (-3.5% to $6.6 billion), and lumber, millwork, hardware and other (-2.7% to $10.3 billion). CHBA continues to monitor these trends.
In December, the Industrial Product Price Index (IPPI) declined 1.1% month-over-month and was up 7.6% year-over-year. The Raw Materials Price Index (RMPI) fell 3.1% on a monthly basis in December and increased 7.5% year-over-year. […] As US and Canadian interest rates rose in 2022 in response to inflation, the US housing market cooled and, in turn, reduced demand for softwood lumber. When looking at the annual IPPI (which looks at the average price within a given year), softwood lumber prices were up by 0.3% in 2022, after gaining 60.3% in 2021 and 38.6% in 2020. However, within the year, there was substantial movement, and by December 2022, softwood lumber prices fell to levels last seen in June 2020.
Commentary: According to Statistics Canada’s latest industrial product and raw materials price indexes, prices for softwood lumber (-8.9%) posted a fifth consecutive monthly decline in December 2022. On a yearly basis, prices were down 40.2% in December, the largest year-over-year drop on record since the start of the series in January 1956. The decline was mainly due to a slowing residential housing market in the US, which coincided with rising interest rates in the country. In December 2022, the US Federal Reserve announced a 50-basis point interest rate hike, elevating the federal funds rate to its highest level since December 2007. CHBA continues to monitor these trends.