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Wholesale activity still strong but could signal weakness in retail sector

Wholesale activity still strong but could signal weakness in retail sector

Posted on: 5/23/2018 | Author: ATB Financial's Economics + Research Team


Tracking wholesale activity is a good indicator of future retail conditions and the economy in general. The latest wholesale numbers show that Albertans and Alberta-based businesses continue to do their part in charging our province’s economic recovery, but this could slow in the coming months.

In March, the total sales of products to businesses, institutions and governments, reached $6.7 billion. March’s total meant that sales were up 5.6 per cent from the same month a year earlier. However, despite the increase annually, total sales slipped about one percentage point over the course of the month. March’s decline may signal the beginning of a slowing retail sector.

March’s total was the first time in four months where sales hadn’t increased month-over-month. The decline in sales from February to March was the result of lower machinery and equipment (-2.6 per cent). It’s worth noting that this subsector of wholesale has declined 4.5 per cent over the past two months.

Since wholesalers sell to other businesses, institutions and governments, the monthly decline could mark weakness in the province’s retail sector. Even though retail sales continue to hover around their record highs, sales from retailers are expected to come down as the year progresses. A slower retail sector may be starting to chip away at the province’s wholesalers which means we could see wholesale activity begin to wane in the coming months.

This week, ATB released its second Alberta Economic Outlook of 2018. The Outlook provides insight into what has happened in our economy this year and what is likely to occur in the months ahead. Read ​the complete ATB Alberta Economic Outlook (May 2018) and watch ​watch ATB's Chief Economist summarize it.

Wholesale trade, graph​ ​

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