UPDATE 1-Canada wholesale trade jumps 1.2 pct in May from April

OTTAWA, July 23 (Reuters) - The value of Canadian wholesale trade rose 1.2 percent in May from April as increased purchases of farm products, building materials and miscellaneous goods offset a drop in motor vehicles and parts, Statistics Canada data showed on Monday.

The increase more than erased April’s revised 0.1 percent decline in wholesale trade. Removing the effects of price changes, volumes were up 1.3 percent in May, Statscan said.

The report boded well for the economy in the second quarter. Still, Canada is expected to see slower economic growth in the second half of the year.

Wholesale trade rose in four out of seven sectors, accounting for about 50 percent of total sales, according to the report.

In dollar terms, the miscellaneous subsector reported the largest increase in May, as sales rose 7.8 percent, led by a 25.6 percent gain in the agricultural supplies industry.

Sales in the building materials and supplies subsector rose 5.0 percent while the farm product subsector rebounded from an April decline to post a 25.5 percent gain in May.

Sales in the motor vehicle and supplies subsector fell 2.5 percent, the second consecutive monthly decrease and the fifth drop in six months, bringing the subsector to its lowest level since December 2016.

Wholesale inventories rose for the second consecutive month, up 1.4 percent to a record C$84.0 billion in May. Five of seven subsectors posted increases, representing 90 percent of total wholesale inventories, Statscan said.

Reporting by Andrea Hopkins and Dale Smith in Ottawa Editing by Susan Thomas