What an increase in wholesale sales means for GDP

Wholesale sales rose in July for the third time in five months, up 1.5% to $63.9 billion, StatsCan reported Monday.

The increase offsets June’s 0.9% decline, with sales up in four of seven sub-sectors representing about 66% of total wholesale sales.

The monthly gain was well above the consensus forecast of +0.5%.

Leading July’s gains were personal and household goods; food, beverage and tobacco; and motor vehicle and parts. The miscellaneous sub-sector, which includes paper and disposable plastic products, posted the largest decline, down 0.2%.

In volume terms, wholesale sales increased 1.2%, which suggests “a solid contribution to monthly GDP,” said CIBC senior economist Andrew Grantham in emailed commentary. July’s GDP figures will be released Friday.

He added, however, that any monthly GDP growth will be marginal considering the soft oil sector. Today’s data won’t have much of a market reaction, he said.