www.td.

com/economics

TD Economics
Commentary
January 21, 2009

CANADA: WHOLESALE SALES FALL IN LINE

WITH EXPECTATIONS
• Canadian wholesale trade slips 1.6% M/M in
November. The rise in inventories push the I/S
ratio to its highest level since early 2001.
• The slowdown in sales was broad based, as was
the expansion in inventories.
Canadian wholesale trade fell 1.6% M/M in Novem-
ber, which was basically in line with expectations. This is
not only the first back-to-back drop since 2006 but also
the third decline in four months, and sets up a weak back-
drop for Canada’s November GDP. In real terms, whole-
sale trade fell 3.0%. Wholesale sales excluding autos were
down 1.5% M/M in November.
The cross section of industries that posted losses was
broad, as four of seven industries declining. Evidence of
weakening global demand was seen everywhere. But par-
ticularly large declines were recorded in the “other prod-
ucts” category, which fell 6.0%, automotives which fell
2.2% M/M and machinery and equipment which fell 1.6%
M/M. Not only was the cross sector of industries broadly
depressed, but the pace of sales using a provincial cross
section was also down, as nine provinces posted declines.
Inventory levels also rose in November with a 1.0%
M/M gain, following the 0.9% M/M gain in October. In-
ventories were higher in 10 of 15 sectors which suggests
that wholesalers now have to contend with a growing in-
ventory overhang at a time when sales are slowing. In
November, the inventory to sales ratio was at its highest
since February 2001 at 1.32.
On balance this reports adds to the growing body of
evidence that points to a weak November GDP number,
which will subsequently translated into a weak fourth quarter
GDP report. Moreover, this report corroborates the view
that the Bank of Canada presented recently that the Ca-
nadian economy is in recession.
Charmaine Buskas
Senior Economics Strategist
TD Securities

For further information, contact Beata Caranci at 416-982-8067.

This report is provided by TD Economics for customers of TD Bank Financial Group. It is for information purposes only and may not
be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank
Financial Group and the members of TD Economics are not spokespersons for TD Bank Financial Group with respect to its
business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not
guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and
financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and
uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that
comprise TD Bank Financial Group are not liable for any errors or omissions in the information, analysis or views contained in this
report, or for any loss or damage suffered.

TD Economics Commentary January 21, 2009