Canada Wholesale Sales Slip 0.6% in July as Q3 Momentum Fades

Canadian wholesale sales fell 0.6% in July from June, the first drop since January, as weaker agricultural and mineral demand tempered the strongest monthly gain in more than three years.

The advance estimate from Statistics Canada, based on a weighted response rate of 65% to its monthly survey, points to lower sales in agricultural supplies and mineral, ore and precious metals within the miscellaneous subsector, the data agency said Tuesday.

The retreat follows a 2.8% surge in June — the strongest advance in more than three years — driven by the machinery, equipment and supplies sector. In volume terms, June wholesale trade rose 1.9% to the highest level on record. The July pullback comes alongside an early estimate showing manufacturing sales edged down 0.2% from a month earlier, the first decline in six months for a sector that had been expanding despite elevated U.S. tariffs.

Wholesalers — the largest component of Canada's services sector — connect producers with companies and public institutions, and also import goods for redistribution within the country. The July data suggests some softening in the economy to start the third quarter after a burst of activity in the spring. Statistics Canada is scheduled to release official wholesale trade data Sept. 15, followed by second-quarter GDP figures Friday, where economists expect 3.5% annualized growth after GDP inched down 0.1% in the first three months of 2026.

June Surge Sets a High Bar

The June jump of 2.8% marked the sector's strongest monthly performance since early 2023, more than making up for a dip in May. The machinery, equipment and supplies subsector drove broad gains, with seven of nine wholesale categories recording higher sales. In volume terms, June wholesale trade climbed 1.9% to the highest level on record, reflecting the breadth of the spring expansion.

The July reversal was concentrated in the miscellaneous subsector, which includes agricultural supplies and mineral, ore and precious metals. Statistics Canada's wholesale measure excludes petroleum and oilseed and grain sales, meaning the decline reflects genuine demand softening rather than commodity price swings.

The softening extends beyond wholesale. Retail sales rose 0.6% to C$74.3 billion in June, but Statistics Canada's advance estimate points to a 0.8% decline in July. Core retail sales, excluding gasoline stations and motor vehicle dealers, increased 1.2% in June, marking a second consecutive monthly rise, while e-commerce sales jumped 9.9% to C$5.7 billion.

Q2 GDP Data Due Friday

The wholesale and manufacturing estimates arrive ahead of Friday's official gross domestic product release for the second quarter, along with a forecast of industry-level GDP for July. Economists expect 3.5% annualized growth for the latest quarter, a sharp rebound from the 0.1% contraction in the first three months of 2026.

The data will factor into Bank of Canada policy deliberations as the central bank weighs the durability of the spring rebound against lingering trade uncertainty. A softer third-quarter start, if confirmed by the official wholesale data and July GDP forecast, could reinforce expectations for further easing in the coming months.

This article is for informational purposes only and does not constitute investment advice.