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Economy in Brief

U.S. Wholesale Inventories and Sales Moderate M/M
by Tom Moeller  July 10, 2014

Wholesale sales increased 0.7% (6.6% y/y) during May following an unrevised 1.3% gain in April. In the durable goods sector, sales inched 0.2% higher (5.9% y/y) after 1.6% increases in the prior two months. The latest rise was held back by a 1.6% decline (+5.5% y/y) in sales of computer equipment. Furniture sales also were off 1.1% (+3.2% y/y) and electrical and electronic goods sales fell 1.1% (+5.7% y/y). Offsetting these declines were a 3.2% increase (11.3% y/y) in metals, a 1.1% gain in automotive (4.0% y/y) and a 1.0% rise (12.0% y/y) in machinery sales. Nondurable goods sales improved 1.1% (7.2% y/y) and repeated the April gain. Farm products led the increase with a 6.6% rise (6.7% y/y) while apparel sales rose 2.0% (10.7% y/y). Chemical sales increased 1.4% (9.8% y/y) but paper products sales fell 1.0% (+4.2% y/y). Grocery product sales slipped 0.3% (+4.8% y/y) and petroleum & product sales were unchanged (+12.3% y/y).

Inventories at the wholesale level gained 0.5% (7.9% y/y) during May. That followed a 1.0% April increase, revised from 1.1%, and a 1.1% March gain. The rise owed to a 1.0% improvement (8.5% y/y) in durable goods inventories, led by a 1.9% gain (10.4% y/y) in automotive inventories. Lumber & construction materials inventories increased 1.2% (8.6% y/y) and machinery inventories rose 1.1% (13.5% y/y). To the downside, nondurable goods inventories were off 0.3% (+6.9% y/y), led lower by a 3.2% decline (+5.3% y/y) in farm products and a 1.9% drop (+2.4% y/y) in groceries. To the upside were petroleum inventories by 2.0% (-0.8% y/y) and chemicals inventories by 0.5% (5.7% y/y). Apparel inventories were roughly unchanged (6.8% y/y).

The wholesale sector's inventory-to-sales ratio held m/m at 1.18 for the third straight month. It's risen, however, from 1.16 at year-end. In the durable goods sector, the I/S ratio increased to 1.59 versus its low of 1.49 during all of 2011. In the nondurables sector, the I/S ratio of 0.83 neared the expansion low led down by a 0.32 ratio in petroleum.

The wholesale trade figures are available in Haver's USECON database.

Income Inequality and Monetary Policy: A Framework with Answers to Three Questions from the Federal Reserve Bank of St. Louis can be found here.

Wholesale Sector - NAICS Classification (%) May Apr Mar Y/Y 2013 2012 2011
Inventories 0.5 1.0 1.1 7.9 4.0 5.5 9.4
Sales 0.7 1.3 1.6 6.6 4.3 4.8 12.4
I/S Ratio 1.18 1.18 1.18 1.16 (May'13) 1.17 1.18 1.15
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