* Markets had expected a more modest 0.1 percent increase
* August advance follows two consecutive monthly declines
OTTAWA, Oct 18 (Reuters) - Canadian wholesale sales increased by a higher than expected 0.5 percent in August over July on increased sales of food and machinery, Statistics Canada data indicated on Thursday.
The advance, greater than the 0.1 percent rise forecast by market analysts, follows two consecutive monthly declines. Statscan revised July's decline to 0.7 percent from an initial 0.6 percent fall.
Four of the seven subsectors, representing 56 percent of total sales, reported increases. In volume terms, wholesale sales were up by 0.5 percent.
Food industry sales grew by 2.7 percent, the largest month-on-month jump since the 3.0 percent recorded in February 2010. The machinery, equipment and supplies subsector rose by 1.4 percent while building material sales grew by 1.0 percent.
Lower sales of chemicals and agricultural supplies helped pull down the miscellaneous subsector by 1.9 percent.