Despite a significant decline in gasoline station sales (-3.7%), which was mainly due to a drop of 4.9% in gasoline prices, according to the Consumer Price Index (CPI), sales in the automotive sector increased 0.3%.

Excluding sales from dealers of new, used and recreational vehicles and auto parts, retail sales increased by 0.3%.

Among the sectors, five had sales increases above 1.0%: pharmacies and personal care stores (+1.8%), furniture, home furnishings and electronics stores (+1.5%), clothing and accessories stores (+1.4%), together with miscellaneous retailers (+1.4%), and general merchandise stores (+1.3%).

In constant dollars, total retail sales grew 1.4% in August, indicating that there was a price effect. In addition to the decline in gasoline prices, the CPI showed a reduction of 1.8% in the cost of vehicle purchases and leases. Manufacturers' discounts on 2007 models accounted for this downward movement in new vehicle prices.

Sales of new cars recover in August

The increase of 3.0% in sales by new car dealers largely offset the 3.1% decline observed in July. The New Motor Vehicle Sales Survey revealed a 2.8% increase in sales, mainly due to the recovery of truck sales (which include minivans, sport-utility vehicles, light and heavy trucks, vans and buses).

Used and recreational vehicle and auto parts dealers experienced a decrease of 0.6% in their sales after a relatively flat month in July (+0.1%).

Sales in gasoline stations fell (-3.7%) for the third consecutive month. Nevertheless, since the drop in sales observed in September 2006, the trend has generally been upward.

Generalized increase in sales cancels out most of the decline in July

The pharmacies and personal care stores sector's advance of 1.8% in August was the second largest increase since the beginning of the year. Moreover, this sector posted only two months of declines since the middle of 2005.

The August rise of 1.5% in the furniture, home furnishings and electronics stores sector was the second consecutive monthly increase of over 1.0%. Rising sales in this sector were mainly due to the increase of 3.7% in sales by home electronics and appliance stores, representing the sharpest advance observed since February 2005. Sales in this trade group have not declined since the spring of 2006.

Both the clothing and accessories stores and the miscellaneous retailers sectors recorded an increase of 1.4% in sales in August, offsetting the decline in their July sales. The increase in sales in the clothing and accessories stores sector was mainly due to a rise of 1.7% in clothing stores sales, which more than offset the decline observed in July (-0.6%).

Sales in the general merchandise stores sector rebounded (+1.3%), almost entirely offsetting the decreases observed in this sector for the previous two months.

The building and outdoor home supplies stores sector saw an increase of 0.7% in its sales in August, offsetting most of the 1.0% decline in July sales. The increase in this sector's sales was attributable to home centres and hardware stores (+1.2 %), which experienced a rebound in sales that had decreased in the previous two months. According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts advanced 5.1% in August. Sales by specialized building material and garden stores decreased (-1.6%) for the second month in a row.

Sales in the food and beverage stores sector increased 0.3% in August. The major player in this sector, supermarkets, saw an increase in sales of a similar magnitude (+0.2%) after a decline of 1.0% in July. Beer, wine and liquor stores partially recovered (+0.7%) after a decline of 2.0% in July, whereas sales by convenience and specialty food stores remained practically flat (+0.1%).

New cars revive sales in Ontario and stimulate sales in Quebec and Prince Edward Island in August

In eight of the provinces and territories, retail sales were up in August. Prince Edward Island (+2.5%) and Ontario (+2.0%) recorded the two strongest sales growth rates, mainly because of increased sales by new car dealers. In the case of Prince Edward Island, this was the fourth consecutive monthly increase. Furthermore, according to the New Motor Vehicle Sales Survey, sales in Prince Edward Island advanced 13.2%.

The increases in Ontario (+2.0%) and Quebec (+0.6%) accounted for almost the entire advance in retail sales, with the automotive sector mainly responsible for this increase. The increase in August in Ontario almost totally offset the decline in July, which followed the strongest quarterly growth since the first quarter of 2002. In Quebec, growth in retail sales cancelled out most of the decline in July, which followed the strongest quarterly growth since the second quarter of 2001.

Of the provinces recording rising sales, Saskatchewan (+0.7%) experienced its sixth consecutive advance since the beginning of the year. The rise in Newfoundland and Labrador (+0.4%) was the sixth in the previous seven months.

Alberta (-0.5%) experienced a decline in retail sales for the second consecutive month, whereas sales in British Columbia, after stagnating in July, remained relatively flat (-0.1%).

Related indicators for September

In September, the unemployment rate edged down 0.1% to 5.9%. The unemployment rate was less than 6.0% for the first time since November 1974. This decline in the unemployment rate coincided with an estimated increase in employment of 51,000 jobs, and most of these were full-time jobs.

Provisional data on automotive industry sales indicate that the number of new motor vehicles sold dropped 2% in September.

According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts increased for the second consecutive month in September by 19.6%, from 232,700 units in August to 278,200 units in September.

Retail sales
	August 2006	May 2007r	June 2007r	July 2007r	August 2007p	July to August 2007	August 2006 to August 2007
	Seasonally adjusted
	$ millions					% change
Automotive	11,629	12,318	11,967	11,751	11,787	0.3	1.4
New car dealers	6,465	6,736	6,507	6,308	6,494	3.0	0.5
Used and recreational motor vehicle and parts dealers	1,478	1,665	1,600	1,601	1,592	-0.6	7.7
Gasoline stations	3,686	3,917	3,860	3,842	3,700	-3.7	0.4
Furniture, home furnishings and electronics stores	2,324	2,490	2,485	2,530	2,569	1.5	10.5
Furniture stores	806	853	835	855	847	-0.9	5.2
Home furnishings stores	445	494	504	513	517	0.8	16.3
Computer and software stores	132	122	115	112	115	2.8	-13.0
Home electronics and appliance stores	941	1,021	1,031	1,051	1,089	3.7	15.7
Building and outdoor home supplies stores	2,110	2,241	2,248	2,225	2,240	0.7	6.2
Home centres and hardware stores	1,717	1,828	1,818	1,803	1,825	1.2	6.3
Specialized building materials and garden stores	393	413	430	422	415	-1.6	5.6
Food and beverage stores	7,390	7,648	7,700	7,620	7,639	0.3	3.4
Supermarkets	5,332	5,457	5,501	5,447	5,457	0.2	2.3
Convenience and specialty food stores	785	848	844	845	846	0.1	7.8
Beer, wine and liquor stores	1,273	1,343	1,355	1,328	1,337	0.7	5.0
Pharmacies and personal care stores	2,209	2,368	2,352	2,369	2,411	1.8	9.1
Clothing and accessories stores	1,889	2,010	2,011	2,006	2,035	1.4	7.7
Clothing stores	1,433	1,545	1,545	1,536	1,562	1.7	9.0
Shoe, clothing accessories and jewellery stores	457	465	466	470	472	0.5	3.4
General merchandise stores	3,898	4,084	4,044	4,022	4,073	1.3	4.5
Miscellaneous retailers	1,682	1,793	1,784	1,769	1,794	1.4	6.7
Sporting goods, hobby, music and book stores	828	890	889	873	882	1.1	6.6
Miscellaneous store retailers	854	903	895	896	912	1.8	6.7
Total retail sales	33,131	34,952	34,592	34,291	34,547	0.7	4.3
Total excluding new car dealers, used and recreational motor vehicle and parts dealers	25,187	26,552	26,484	26,382	26,460	0.3	5.1
Provinces and territories
Newfoundland and Labrador	505	546	557	553	555	0.4	9.9
Prince Edward Island	123	131	133	135	138	2.5	12.1
Nova Scotia	944	974	956	975	968	-0.7	2.6
New Brunswick	739	796	792	793	795	0.3	7.6
Quebec	7,373	7,888	7,566	7,508	7,552	0.6	2.4
Ontario	11,967	12,346	12,281	12,016	12,251	2.0	2.4
Manitoba	1,097	1,176	1,174	1,181	1,179	-0.2	7.4
Saskatchewan	969	1,069	1,069	1,081	1,089	0.7	12.4
Alberta	4,835	5,180	5,209	5,196	5,173	-0.5	7.0
British Columbia	4,468	4,725	4,733	4,733	4,727	-0.1	5.8
Yukon	38	41	42	41	41	0.6	7.7
Northwest Territories	51	56	55	57	56	-1.7	10.0
Nunavut	22	24	23	23	24	3.0	7.3
r revised p preliminary Note: Figures may not add up to totals due to rounding.

Sales of motor vehicles, parts and services increased 9.1% to $25.8 billion. This was the highest increase since the third quarter of 2002 and was due to the strength of sales of new motor vehicles, which rose 8.1%. Sales of new cars rose 4.3% after two consecutive declining quarters. The sales value of new trucks, vans, minivans and sport utility vehicles rose 11.6%, the fourth consecutive quarterly increase. Used vehicle sales were also strong, up 13.3%.

According to the New Motor Vehicle Sales Survey (NMVS), the sales value of trucks rose by 5.5% during the same period. The difference between the surveys' results is attributable to the inclusion, in the NMVS, of sales of heavy trucks by wholesalers, which declined substantially in 2007. In 2006, firms increased their purchases of heavy trucks in order to renew their fleets to meet new environmental regulations that came into effect in the United States at the beginning of 2007.

Sales of automotive fuels, oils and additives also rose (+9.1%) in the second quarter of 2007, representing the highest year-over-year increase since the second quarter of 2006.

The ongoing strength in the housing market continued to propel sales of furniture, home furnishings and electronics. In the second quarter, retailers sold $8.8 billion of these commodities (+8.5%), continuing an upward trend for the third consecutive quarter.

Within this category, sales of home furnishings were strong (+12.1%) while home electronics (+7.9%) and indoor furniture (+6.9%) grew less rapidly.

Sales of hardware, lawn and garden products advanced 6.6% to $9.3 billion in the second quarter. Within this category, hardware and home renovation products rose 8.1%, the highest increase since the third quarter of 2006. The largest component of this category, lumber and other building materials, rose 8.2% over the same quarter last year, a moderation of the double-digit growth in 2006.

After increasing at their fastest pace in nearly five years in the first quarter of 2007, year-over-year sales of health and personal care products rose 8.3%, the lowest increase in a year. Since the second quarter of 2006, sales of these commodities have been increasing at a faster pace than total retail sales. Sales of prescription drugs posted double-digit growth (+10.0%) while sales growth of over-the-counter drugs, vitamins and herbal remedies grew 8.5% in the second quarter, down from 13.5% in the first quarter.

Sales of clothing, footwear and accessories amounted to $8.3 billion, up a moderate 4.0% over the same period in 2006. Within this group, sales of women's clothing (+4.4%), children's clothing (+4.0%) and men's clothing (+3.6%) all rose moderately, while sales of footwear (+2.1%) had their weakest increase since the fourth quarter of 2004.

Clothing, footwear and accessories sales grew 5.6% in the second quarter in clothing and accessories stores, while sales dropped 0.4% in general merchandise stores (which include department stores). As a result, clothing and accessories stores accounted for 67% of sales of clothing, footwear and accessories, up from 66% in the second quarter of 2006, while general merchandisers saw their share of sales decline from 25% to 24% for the same period.

Sales of food and beverages rose 5.9% from the second quarter of 2006. At 20.4% of retail sales, it is this commodity's lowest share of total retail sales since the series began in 1998. Sales of alcoholic beverages were up 7.7%, with more moderate increases in food (+5.5%) and non-alcoholic beverages (+4.3%).

Year-over-year sales of sporting and leisure goods amounted to $3.3 billion, up 7.6% and continuing an upward trend since the fourth quarter of 2006.

Note: The Quarterly Retail Commodity Survey collects national level retail sales by commodity, from a sub-sample of businesses in the Monthly Retail Trade Survey. Quarterly data have not been adjusted for seasonality. All percentage changes are year-over-year.

Prior to the three consecutive monthly declines, sales of new motor vehicles had been trending up since the fall of 2005 despite large fluctuations. Preliminary industry data for the month of September suggest that sales of new motor vehicles are expected to fall by 2%, mainly due to a decline in truck sales.

Trucks dominate sales increase in August

While both passenger cars and truck sales increased in August, truck sales (which include minivans, sport-utility vehicles, light and heavy trucks, vans and buses) outperformed passenger cars, accounting for over 85% of the increase in total vehicles sold.

Truck sales advanced 4.9% to 70,399 vehicles in August, partially offsetting two consecutive months of sales declines. Truck sales have fluctuated since the beginning of 2007, with four out of eight months registering gains.

Passenger cars sales edged up 0.8% to 73,206 vehicles after declining 2.3% in July. Sales have been lackluster since a strong 7.2% increase in April 2007. North American-built passenger cars were the driving force behind the passenger car sales gain in August, rising by 1.6% to 46,801 vehicles. Sales of North American-built cars had a rough start to the year, with a 10.8% sales drop in January followed by two additional months of declines. After a nearly full recovery in April with an 11.8% gain, sales have since remained below the average monthly sales levels seen in 2005 and 2006.

Sales of overseas-built passenger cars slipped 0.7% in August. So far this year, overseas-built cars have accounted for 36.1% of total passenger cars sold. This is higher than the 2006 average of 33.6% and the highest share since 1992.

Sales in Quebec and Ontario drive national increase

Although all but three provinces saw sales rise in August, 95% of the national increase came from Quebec (+4.6%) and Ontario (+4.3%). The gains in these two provinces partially offset their recent monthly declines.

Sales in Prince Edward Island (+13.2%) rebounded from two months of declines. Sales in this province have been generally on the rise since the fall of 2006. Increases in August were also seen in Manitoba (+5.6%), New Brunswick (+3.3%), Nova Scotia (+2.0%) and Saskatchewan (+1.2%).

Sales in Saskatchewan have picked up speed, with only three sales declines recorded since August 2006. Auto sales in Newfoundland and Labrador followed a similar pattern but have levelled off in recent months, declining 1.2% in August.

Sales in Alberta (-0.5%) and British Columbia (-0.7%) also fell in August. For British Columbia, August represented the fourth consecutive monthly decline. In fact, since the start of 2007, sales only increased in two out of eight months.

New motor vehicle sales
	August 2006	July 2007r	August 2007p	August 2006 to August 2007	July to August 2007
	Seasonally adjusted
	number of vehicles			% change
New motor vehicles	142,843	139,740	143,606	0.5	2.8
Passenger cars	72,403	72,659	73,206	1.1	0.8
North American1	47,891	46,058	46,801	-2.3	1.6
Overseas	24,512	26,601	26,406	7.7	-0.7
Trucks, vans and buses	70,440	67,081	70,399	-0.1	4.9
New motor vehicles
Newfoundland and Labrador	1,988	2,436	2,407	21.1	-1.2
Prince Edward Island	431	418	473	9.7	13.2
Nova Scotia	4,033	4,124	4,207	4.3	2.0
New Brunswick	2,972	3,122	3,226	8.5	3.3
Quebec	35,479	33,010	34,519	-2.7	4.6
Ontario	52,457	49,978	52,107	-0.7	4.3
Manitoba	3,773	3,736	3,944	4.5	5.6
Saskatchewan	3,377	3,868	3,914	15.9	1.2
Alberta	21,871	22,219	22,104	1.1	-0.5
British Columbia2	16,462	16,828	16,705	1.5	-0.7
	August 2006	July 2007r	August 2007p	August 2006 to August 2007
	Unadjusted
	number of vehicles			% change
New motor vehicles	157,868	145,370	160,883	1.9
Passenger cars	82,244	77,722	84,021	2.2
North American1	53,812	47,819	53,703	-0.2
Overseas	28,432	29,903	30,318	6.6
Trucks, vans and buses	75,624	67,648	76,862	1.6
New motor vehicles
Newfoundland and Labrador	2,482	2,731	2,970	19.7
Prince Edward Island	531	519	637	20.0
Nova Scotia	4,597	4,580	4,967	8.0
New Brunswick	3,389	3,408	3,767	11.2
Quebec	40,566	35,557	39,972	-1.5
Ontario	56,732	50,501	57,586	1.5
Manitoba	4,471	3,899	4,721	5.6
Saskatchewan	3,963	4,103	4,633	16.9
Alberta	23,266	22,236	23,588	1.4
British Columbia2	17,871	17,836	18,042	1.0
r revised p preliminary 1. Manufactured or assembled in Canada, the United States or Mexico. 2. Includes Yukon, the Northwest Territories and Nunavut. Note: Figures may not add up to total due to rounding.

Note to readers

All data in this release are seasonally adjusted.

Passenger cars include those used for personal and commercial purposes, such as taxis or rental cars. Trucks include minivans, sport-utility vehicles, light and heavy trucks, vans and buses.

North American built new motor vehicles include vehicles manufactured or assembled in Canada, the United States or Mexico. All other new motor vehicles are considered to have been manufactured overseas.

For reasons of confidentiality, data for Yukon, the Northwest Territories and Nunavut are included with those for British Columbia.

The New Motor Vehicle Sales Survey is compiled on the basis of figures obtained from motor vehicle manufacturers and importers. These results may vary from those obtained directly from auto dealers, due to possible differences in record keeping.

WATERLOO - Descartes Systems Group, a global on-demand software-as-a-service (SaaS) logistics solutions provider, announced that Philadelphia-based convenience store chain Wawa, Inc. has improved its delivery operations and customer service with the deployment of Descartes AVL (Automated Vehicle Locator) Service for its direct distribution operations.

Wawa, a long-time Descartes Routing and Scheduling solution user, is leveraging Descartes AVL Service to efficiently reallocate drivers to other parts of its operations, increasing its capacity utilization to greater than 90% and reducing operating costs.

Descartes' Intelligent AVL provides a Web-based view of real-time information on delivery arrivals at distribution centers or hubs, enabling dispatchers to adapt routes quickly and efficiently according to exceptions. The AVL Service also features a wireless application that uses Global Positioning Satellite (GPS) locating capabilities to provide real-time data on driver progress against established route plans and enable on-the-spot decision making to meet customer commitments. Both are designed to work with Descartes Routing and Scheduling solutions.

"As a high-end convenience store and producer with a distribution network that spans five states, having up-to-the-minute information on driver and fleet activities is critical to maintaining high levels of customer service," said Don Kane, Distribution Manager at Wawa, Inc. "We've had so many years of success with Descartes Routing and Scheduling solution, that when we wanted to integrate AVL functions into our operations, Descartes was the natural choice."

By integrating AVL services with its existing Descartes Routing and Scheduling solution, Wawa has improved security, is better able to manage driver salaries and overtime, has more balanced routes and introduced the ability to compare planned versus actual truck locations. In addition, customer service representatives can now access the system to advise customers on the status of their deliveries.

"With a fleet of more than 225 trucks and trailers, it is a constant challenge for Wawa to have its time-sensitive deliveries make it to their destination on time," said Joanne Cochrane, Implementation Consultant at Descartes. "AVL and MobileLink Tracker enable Wawa to gain even greater insight into whether hourly-paid drivers are following planned routes and making the scheduled stops. Having this level of visibility empowers them to save significant costs relating to added miles and overtime hours, among other areas. It's an outstanding example of how our customers are building on their existing Descartes solution offerings to drive even more efficiencies and savings."

TORONTO - Beginning today - October 1 2007 -, new regulations under the Consumer Protection Act will prohibit expiry dates on gift cards, restrict service fees, and require all retailers to disclose gift card terms and conditions clearly and prominently.

Shopping mall gift cards will not be covered by the new fee restrictions, pending further review of the market over the next several months. The terms and conditions of gift cards sold prior to October 1st will not be affected, including any stated expiration date or associated fees.

For further information, visit: www.e-laws.gov.on.ca.

<< -------------------------------------------------------------------------

Banning Gift Card Expiry Dates

Beginning October 1, amendments to the Consumer Protection Act 2002 and Ontario Regulation 17/05 that relate to the sale of gift cards come into effect.

The amendments establish rules to protect consumers in Ontario who purchase or receive gift cards or gift certificates from stores and malls. The new consumer protection measures now in force include:

1. Prohibiting expiry dates on gift cards and certificates

2. Restricting fees charged for gift cards to a) customizing a gift card, or b) replacing a lost or stolen gift card;

3. Requiring the clear and prominent disclosure of any terms and conditions relating to a gift card (e.g., any limits to redeeming a card). >>

Most major Canadian retailers sell gift cards to their customers. Gift cards and other stored-value cards are one of the fastest-growing products in the marketplace today. Most of the cards issued to date, however, include an expiry date averaging between 18 months and two years, and many retailers fail to disclose applicable terms and conditions. Several major retailers in Ontario charge some kind of service fee that erodes the balance after a specific length of time.

The restriction on fees will not apply to cards that are redeemable at more than one unaffiliated store (e.g., shopping mall cards) for a period of 270 days from today. This will allow more time to develop an approach that strikes the right balance for consumers and businesses.

Businesses in Ontario must make every effort to accurately notify consumers about the terms affecting gift cards, and ensure that consumers are aware that expiry dates are not applicable to gift cards purchased beginning today.

The law does not apply to loyalty cards used to collect rewards or points, and will not apply to cards that are subject to federal jurisdiction, such as pre-paid phone cards.

Canadian online shopping activity expected to surpass projections

TORONTO - With the crucial holiday shopping period just around the corner, savvy U.S. retailers plan to take advantage of parity between the U.S. and Canadian dollar for the first time in 31 years to shift Canadian spending preferences online. While this could spell great returns for retailers in the competitive fourth quarter, the ultimate winner should be the Canadian consumer according to online shopping authorities at airmilesshops.ca.

"As the Canadian dollar gains strength, Canadian shoppers are realizing the advantages of online shopping," says Emmie Fukuchi, General Manager of www.airmilesshops.ca. "Our U.S. retail partners have seen a steady climb in activity ever since the dollar hit the $0.80US mark two years ago. With parity, they expect to see an increase in cross-border online shopping that outperforms initial projections for the year."

According to a January 2007 report by eMarketer, 12 million Canadians shopped online and 9 million bought products or services over the internet in 2006, totaling $9.4 billion in sales on product and services (including travel bookings). A 2006 Statistics Canada report estimates that historically 63 per cent of these transactions were with Canadian vendors, while 37 per cent were with retailers in the U.S.

"2007 was expected to be a year of accelerated growth for online shopping in Canada, and with our dollar reaching parity and climbing, we should expect to see an increase in both the total spend of Canadians online, and the total number of Canadians shopping online," added Fukuchi. "U.S. retailers are also picking up on this trend by adjusting their strategies accordingly with discount offers for Canadian customers or by waiving service or shipping charges."

"As a result of increased traffic online, Canadian retailers should experience a halo effect and benefit from the sheer volume of online activity throughout the busy fall and holiday shopping season," says Fukuchi. "With increased competition, we should see better offers and pricing for consumers, as well as value-added customer service and an overall improvement to online customer experience across the board."

Jim Okamura, senior partner with Toronto-based e-commerce consultancy J.C. Williams Group Ltd., stated that, "Canadian-based portals to U.S. retailers offer even more value to Canadian online shoppers by providing useful features, such as product search tools, special offers and in the case of, www.airmilesshops.ca, the added value of a popular Canadian-based benefit - AIR MILES reward miles on all purchases."

Canadians can visit www.airmilesshops.ca to make purchases at leading North American brands like J.Crew, Bose, Brookstone, Lands' End and Victoria's Secret while saving time, gas and travel expenses and avoiding the hassles of border crossing line-ups.

In recent years, Canadians have been purchasing a wider variety of goods online with clothing, jewelry, sporting goods and toys among the fastest growing categories. Traditional online purchase such as books, CDs, DVDs and personal electronics are more popular than ever.

The key automotive products sector led the way with a 4.9% gain on the back of strong demand for motor vehicles. July also proved to be a good month for wholesalers of personal and household goods (+4.0%), machinery and electronic equipment (+2.8%), and building materials (+1.3%). Sales excluding the automotive sector rose 1.3% in July.

The most significant decline came in the food, beverages and tobacco products sector, where sales fell (-0.8%) for the third consecutive month.

July's strong performance in the wholesale industry reversed some of the second quarter's weakness, when overall sales fell for the first time in almost four years, largely the result of weak automotive sales.

Sales in constant prices, which take price fluctuations into account, rose 2.5% in July.

Pickup in motor vehicle sales drives automotive products sector higher

The automotive products sector bounced back in July, as sales rose 4.9% to $8.3 billion following a 0.9% decline in June. Increased sales of motor vehicles (+6.2%) accounted for all of the rise, while sales of motor vehicle parts and accessories edged down (-0.3%).

Although still not back to the record level reached in March 2007, July's increase in motor vehicle sales marks a turnaround from the second quarter, when sales of motor vehicles fell 5.0%, the largest quarterly decline since the third quarter of 2004.

With imported vehicles accounting for over half of the sales made by wholesalers, July's increase also coincided with a turnaround in automotive imports. According to the latest Canadian international merchandise trade release, passenger car imports surged 26.4% in July. This represented the largest monthly increase since September 2003 and brought an end to a string of three consecutive monthly declines in passenger car imports.

The slight decline in the sale of motor vehicle parts and accessories in July continued a series of fairly lacklustre performances for this trade group, which has seen little or no growth over the past two years. Wholesalers in this industry sell mainly to retailers and dealers.

Demand for machinery and electronic equipment remains strong

Sales in the machinery and electronic equipment sector rose for the third consecutive month in July, up 2.8% to a record high of $9.5 billion.

Of the three trade groups making up this sector, wholesalers of machinery and equipment were the main beneficiaries of the rise, as sales in this trade group jumped 6.1% in July to $4.7 billion. The office and professional equipment trade group registered a more modest rise (+0.6%), while the computer and other electronic equipment trade group fared less well (-0.9%).

July's increase in the machinery and equipment trade group brought sales to a new high, eclipsing the previous peak reached in March 2007. Despite slackening demand for mining and oil and gas well machinery—sales of which have declined significantly since their peak in early 2006—demand for other types of machinery, notably construction and industrial machinery, remains strong.

As most of the machinery and equipment sold in Canada is imported, businesses have been able to take advantage of the strength of the Canadian dollar to purchase equipment at a lower price. Aggregate prices for machinery and equipment have dropped over 17% since 2002, largely the result of the appreciation of the Canadian dollar.

The strong demand for machinery and equipment has also helped boost profits for wholesalers in this sector. According to the latest Quarterly Survey of Financial Statistics for Enterprises, wholesalers of machinery and equipment recorded the strongest profit growth among all wholesale industries during the second quarter of 2007.

Widespread gains in the personal and household goods sector

The personal and household goods sector registered its biggest increase (+4.0%) in 2007, reaching $6.5 billion, more than offsetting June's decline (-1.7%).

All three trade groups in this sector contributed to the rise, led by a 5.5% increase from the pharmaceutical trade group. This was the largest monthly rise so far in 2007 for this trade group, which continues to benefit from high consumer demand.

Apparel wholesalers had another strong month, as sales rose 4.4% in July following a 5.9% increase in June. Prior to this, sales had fallen for five consecutive months after hitting a record high in December 2006.

After declining 3.7% in June, sales of household and personal goods resumed their upward momentum in July, rising 2.2%. This was the fifth increase in 2007 for this trade group.

Ontario and British Columbia lead the way

Ontario was the main beneficiary of the pickup in the automotive sector, as strong demand for motor vehicles helped the province post its biggest increase (+2.5%) of the year, reaching $22.0 billion, more than offsetting June's decline (-1.1%). Notable gains were also made by wholesalers in the machinery and electronic equipment, and personal and household goods sectors.

July's increase helped to offset some of the recent weakness in Ontario, where sales fell in the second quarter as a result of weaker demand for automotive products.

Wholesale sales in British Columbia continued their upward momentum in July, rising a further 2.2% to $4.7 billion. Higher sales of "other products", personal and household goods, and building materials were behind most of the rise in July. Sales in the province have risen almost continuously since the start of 2007.

After registering a substantial increase (+6.4%) in June—the first in three months—wholesale sales in Alberta rose at a more modest rate in July, up 0.9% to $5.5 billion. Higher sales in the "other products" and automotive products sectors were partially offset by weakness in the food, beverages and tobacco products sector, as well as the farm products sector.

In Manitoba, sales advanced 8.7% in July to $1.1 billion, all but reversing June's decline. Higher sales of "other products" and automotive products, both of which registered significant declines in June, were behind most of the increase.

The picture was less rosy in Saskatchewan, where sales fell for the fourth consecutive month in July, down 0.8% to $1.3 billion. Nevertheless, sales in the first seven months of 2007 were still up substantially over the same period in 2006, following a very strong first quarter.

In the Atlantic Provinces, only Newfoundland and Labrador registered stronger sales in July, up 7.4% to $293 million. Rising sales of food products, as well as machinery and electronic equipment were behind most of the increase, which was the third in a row for the province.

Also noteworthy in July was the large increase in Nunavut, where overall sales soared 238% to $10.0 million. This increase reflected the dramatic jump in investment in the region, which is currently experiencing an unprecedented boom in mining exploration and mine development. This investment has also spilled over into other areas of the economy, notably housing construction. According to the latest residential construction investment data, total investment in residential construction in Nunavut registered an almost sixfold increase in the first six months of 2007 compared with the same period in 2006.

Inventory-to-sales ratio falls to lowest level since March

Wholesale inventories increased 0.6% in July to $54.4 billion.

Of 15 trade groups, 8 reported higher inventory levels in July. The most notable increases were in the pharmaceutical (+2.8%), "other products" (+2.3%), motor vehicles (+1.4%) and motor vehicles parts and accessories (+1.9%) trade groups. These increases were partially offset by drops in metal products (-2.9%) and computer and electronic equipment (-1.4%) inventories.

With sales rising at an even faster pace in July, the inventory-to-sales ratio declined from 1.25 in June to 1.23 in July, its lowest level in four months. The pace of inventory accumulation has eased somewhat in recent months, largely the result of reductions in motor vehicles and metal products inventories.

The inventory-to-sales ratio is a key measure of the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Wholesale sales for the second quarter were down for the first time in nearly four years. This contraction was largely attributable to the automotive sector.

In June, increases were observed in the "other products" sector (+2.8%), the machinery and electronic equipment sector (+1.0%) and the farm products sector (+6.0%). These advances, however, were partially offset by contractions in the automotive sector (-1.6%) and the personal and household goods sector (-0.8%).

In constant prices, wholesale sales rose 0.1% in June.

Wholesale sales of "other products" continue to expand in June

For a second consecutive month, the sales of "other products" (primarily agricultural products, chemicals, paper products and recycled materials) rose, up 2.8% in June to $5.4 billion. An increase in global demand for products such as fertilizers and fertilizer materials has contributed in part to the recent sales growth in this sector. According to Export Development Canada, substantial increases in crop acreages in the world (for food, biofuels, etc.) are boosting the demand for Canadian fertilizers. The increased demand for fertilizers has also pushed up their prices.

Wholesale sales continue to rise in the machinery and electronic equipment sector

After rising 2.3% in May, sales of machinery and electronic equipment grew 1.0% in June. Two groups in this sector were behind June's increase.

Machinery and equipment sales posted a second consecutive increase in June (+2.5%). Despite these recent advances, this group's sales were still below the peak reached in March 2007. This weakness was partly due to a sharp decrease in the activities of the oil and gas exploration industry, which caused it to cut back its purchases of machinery and equipment. The low price of natural gas led exploration companies to scale back their activities considerably, leading to a drop in the number of wells operated.

Wholesale sales of computers and other electronic equipment rose 1.9% in June. This was the seventh increase in nine months for this trade group, which, in 2006, had posted its biggest annual increase since 1999. The strong showing of the cell phone market has in part contributed to the robust sales of this group in recent years. According to the Telecommunications Statistics Survey, at the end of 2006 the number of wireless subscribers was up 8.4% compared with 2005 to just over 18 million.

Wholesale sales of office and professional equipment registered a second decline in three months (-3.1%). The drop in sales only partially offset the advance recorded in May (+5.5%).

Sales down in both components of the automotive sector

Wholesale sales in the automotive sector fell 1.6% to $7.8 billion in June, a second decrease in three months. This decline followed the moderate increase observed in May (+0.2%) and the steep drop in sales in April (-8.9%).

Wholesale sales of motor vehicles fell 1.9% in June, a second drop in three months. These declines were attributable in part to decreased demand in North America. Exports of both trucks and cars declined for a third consecutive month. Wholesalers also moderated their purchases, as car imports also declined for a third consecutive month.

Wholesale sales of motor vehicle parts also declined in June (-0.5%). This drop more than offset the 0.2% increase registered in the previous month. Wholesalers in this industry, who mainly sell to retailers and dealers, have seen their sales remain generally stable since March 2004.

Strength observed in Alberta and British Columbia offsets weaker results in Central Canada

The strong performance of Alberta and British Columbia helped to offset a rather lacklustre month of June for wholesalers in Central Canada. At the national level, five provinces as well as the three territories saw a drop in total sales.

In Alberta, wholesale sales posted their first increase in three months, owing to the strong performance of wholesalers of machinery and equipment, and "other products." Wholesalers in British Columbia registered their third increase in four months, mainly attributable to a number of sectors, including machinery and equipment, and food, beverages and tobacco products.

Quebec and Ontario both saw their sales decline 1.2% in June. The decrease of $97 million in Quebec's sales partially offset the increase of $170 million (+2.1%) registered in May. This decrease was attributable to the personal and household goods sector, which accounts for approximately 20% of the province's total sales, as well as to the building materials sector. The drop in sales in the automotive sector especially affected Ontario, where much of this industry is concentrated. Even so, Ontario wholesalers have generally recorded increases in their sales since January 2005.

Inventories up slightly

Wholesalers' inventories rose 0.1% to $54.2 billion in June, the seventh increase in eight months.

June's slight increase in sales contributed to a decrease in the inventory-to-sales ratio, which edged down from 1.26 in May to 1.25 in June. The instability of sales in recent months has contributed to some fluctuation in the ratio. The inventory-to-sales ratio is a key measure of the time (in months) that would be required to exhaust inventories at the current rate of sales.

Total quarterly sales post first decline in nearly four years

Despite the gains of the past two months, sales in the second quarter posted a decline of 0.6%. This reduction, which follows a strong performance in the first quarter (+3.2%), was the first quarterly contraction in wholesale sales since the third quarter of 2003. The reversal in quarterly sales was largely attributable to the automotive sector. In the second quarter, sales of automotive wholesalers declined 4.8%, after growing 7.1% in the previous quarter.

For some sectors, however, quarterly sales were robust. In particular, the food, beverages and tobacco products sector posted a 1.7% gain in the second quarter. Sales in this sector were boosted by higher prices for some food items as well as strong demand by food and beverage stores.

Quarterly sales of personal and household goods rose 1.3%. A rebound in the sales of the household products group in the second quarter (+3.4%) was the main factor in the quarterly increase for the sector.

At the provincial level, Ontario posted a 1.1% decline, having mainly been affected by sluggish sales in the automotive sector. More than 75% of the motor vehicles trade group's sales are concentrated in this province. As well, this sector accounts for more than one-quarter of Ontario's wholesale activities. For its part, Alberta registered a 4.4% drop during the quarter. This was the first contraction in 16 quarters. Alberta suffered from weak sales in the automotive, "other products" and machinery and equipment sectors.