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Economy in Brief

U.S. Wholesale Sales Are Flat Though Inventories Gain
by Tom Moeller  September 12, 2011

On Friday, the Commerce Department reported that sales in the wholesale sector were essentially unchanged during July after a 0.6% jump in June. A 0.8% increase had been generally expected. Holding back the increase was a 1.1% decline (+16.7% y/y) in sales of nondurables. Sales of petroleum & products fell 1.5% but still were up by one-third y/y with higher prices. Sales of paper fell 1.2% (-0.5% y/y) and sales of apparel slipped 0.6% (-0.2% y/y). However, sales of chemicals rose 0.6% (14.5% y/y). In the durables sector, sales were strong due to a 5.3% jump (9.4% y/y) in motor vehicles. Furniture sales also rose a firm 3.3% (7.0% y/y) and machinery rose 1.7% (19.0% y/y). However, these increases were offset by lower sales of electrical equipment (+5.0% y/y) and of hardware, plumbing and heating equipment (+5.1% y/y).

Inventories at the wholesale level posted a firm 0.8% gain, though they had been rising in excess of 1.0% m/m earlier this year. Strength in petroleum prices lifted product inventories by one-third y/y. Elsewhere amongst nondurables, apparel inventories rose 2.9% and by nearly one-third y/y while chemical inventories jumped 2.3% (18.1% y/y). Paper inventories rose 0.6% (7.0% y/y). Amongst durable goods, inventories of autos rose 0.6% (14.3% y/y) but furniture slipped 0.7% (+5.2% y/y). Electrical equipment inventories increased 10.0% y/y and machinery rose 9.9%.

The wholesale sector's inventory-to-sales ratio ticked up again to 1.17, its highest level in nine months. The increase was led by a surge in the apparel sector's ratio to its highest since 1996 (no typo). The paper industry's ratio also surged as did the ratio in the chemical industry. In the durables sector, the ratio held comparatively low except for a surge in computer equipment.

The wholesale trade figures are available in Haver's USECON database. The expectation figure is in AS1REPNA.

Wholesale Sector - NAICS Classification (%) Jul Jun May Y/Y 2010 2009 2008
Sales -0.0 0.6 -0.3 14.4 12.6 -16.1 5.9
Inventories 0.8 0.6 1.7 15.1 11.0 -11.8 3.7
I/S Ratio 1.17 1.16 1.16 1.16 1.16 1.30 1.21
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