NEW YORK WHOLESALE

--Sales of agricultural supplies up most since May 2008

--Wholesale volume grows at fastest pace since July 2011

--Wholesale trade expected to contribute to April GDP

(Adds economist's comments in paragraphs 5-7.)

By Nirmala Menon

OTTAWA--Canada's April wholesale sales trounced expectations to grow at the fastest monthly rate in nearly a year as soaring exports of fertilizers helped drive the largest gain in sales of agricultural supplies since May 2008.

Wholesale sales grew 1.5% - the most since May 2011 - to 49.35 billion Canadian dollars (US$48.19 billion), Statistics Canada said Tuesday. The consensus call was for a tepid 0.2% increase, according to a report from Royal Bank of Canada. March's gain was revised down to 0.3% from 0.4%.

The figures are seasonally adjusted.

Sales volume in April rose 1.3%, the most since July 2011, suggesting that wholesale trade will be a key contributor to monthly gross domestic product figures due at the end of the month.

Emanuella Enenajor, an economist at CIBC World Markets, said data are showing a rebound in the energy and resources- related sectors from production disruptions in the first quarter, when growth was an annualized 1.9%, well short of the Bank of Canada's 2.5% forecast.

So, second-quarter growth may meet or even exceed the 2.5% forecast by the central bank, she said. But the key question is whether the economy can "achieve and continue economic momentum beyond any temporary rebound from the resources sector," and this is unlikely as consumers step back after "engorging at the table of credit for years," Ms. Enenajor said in an interview.

Furthermore, the pace of hiring will probably slow after the second quarter as sectors that have seen good employment growth in recent months, including factories and resources, are vulnerable to the global economic slowdown, she added.

Wholesalers in the agricultural supplies industry reported a 48.5% jump in sales, which coincided with a 51.8% surge in exports of fertilizers and fertilizer materials. As a result sales in the miscellaneous sector, which includes agricultural supplies, were up 12.8%.

Excluding agricultural supplies, overall wholesale sales were unchanged, StatsCan said.

Wholesalers of machinery, equipment and supplies reported a 1.1% increase, while sales in the building materials and supplies sector were up 0.5%. Wholesalers of motor vehicles and parts posted a 0.2% rise, the third consecutive gain.

The four sectors that posted gains accounted for some two-thirds of total wholesale sales.

The largest decline was in the personal and household goods sector which saw a 2.2% drop, dragged by lower sales in the pharmaceuticals and pharmacy supplies industry.

Wholesale inventories climbed 0.3% to C$59.82 billion, with increases in 13 of the 25 industries. The inventory-to- sales ratio declined dropped to 1.21:1 from 1.23:1.

Seven provinces posted higher sales, with Alberta and Saskatchewan contributing the most to the national gain. Sales in Alberta were up 4.6%, the largest increase since 2004, thanks to gains in several industries, including metal service centers and agricultural supplies.

In Saskatchewan, where agricultural supplies account for over one-third of the total, sales were up 6.7%.

Wholesale sales in Ontario rose 0.4%, the third straight gain, while sales in Quebec were up 1.0%.

Write to Nirmala Menon at nirmala.menon@dowjones.com

    (END) Dow Jones Newswires   06-19-121110ET   Copyright (c) 2012 Dow Jones & Company, Inc.