UPDATE 2-Canada wholesale trade rebounds in October

Wed Dec 19, 2012 9:24am EST

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* October wholesale trade +0.9 pct vs forecast of +0.3 pct
    * Food, auto parts and pharmaceuticals contribute most to
gain
    * Inventories edge up 0.2 pct in month

    OTTAWA, Dec 19 (Reuters) - Canadian wholesale trade expanded
by a stronger-than-expected 0.9 percent in October, partially
regaining some of the previous month's losses as six of seven
subsectors reported gains, Statistics Canada said on Wednesday.
    Analysts had predicted wholesale activity would grow just
0.3 percent in the month. 
    In volume terms, wholesale trade was up 0.8 percent and
excluding the auto sector, it was also up 0.8 percent. Statscan
revised the September data to show a decline of 1.5 percent
compared with a 1.4 percent drop initially reported.
    Wholesale sales rose 2.2 percent from October 2011.
 
    The strong wholesale figures contrast with other data
pointing to a weak economy in October, but economists still
expect growth in the fourth quarter as a whole to be sharply
lower than the Bank of Canada's latest projection of 2.5 percent
annualized growth. Third-quarter growth was a disappointing 0.6
percent.
    "This is welcome and should help buffer weakness expected in
industry level gross domestic product which is currently
tracking flat," said Mazen Issa, macro strategist for TD
Securities. 
    "Tomorrow's retail sales figures will help firm up our
estimate for monthly GDP but looking at the quarter as a whole,
we expect that it will be another disappointing quarter for
growth (our official estimate is 1.2%)," he said.
    The food, beverage and tobacco industry accounted for the
biggest gain in dollar terms in the month, rising 1.2 percent
due to a sharp rise in food sales. The auto industry rose 1
percent, the first gain in four months thanks to a spike in
sales of new motor vehicle parts and accessories.
Pharmaceuticals also reported hefty gains.
    Inventories grew in October for the 10th time in 11 months,
rising 0.2 percent, while the inventory-to-sales ratio declined
to 1.25 from 1.26 in September.
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